The European electricity sector and the EU ETS review

Abstract

The European Union Emissions Trading Scheme (EU ETS) has been reviewed and evaluated, and this paper surveys the positions of electricity producers and consumers on the review of the EU ETS. More specifically, the paper examines the positions of electricity producers and consumers on cap-setting and allocation method and discusses to what extent the views of electricity producers and consumers reflected in the Commission’s proposal for changes in the Directive on emissions trading. The paper finds that the Commission’s proposal is not in line with the positions of the electricity producers. The electricity sector is the only sector – together with carbon capture and storage – where the principle of auctioning is applied from 2013. Nor did the electricity-producing sector succeed in getting an equal burden-sharing between the trading and non-trading sectors. The alliance of energy-intensive industries was far more successful as the Commission’s proposal opens for free quotas, alternatively a carbon equalisation system in the energy-intensive sector.