EU plans to slash number of ETS permits: press
The European Commission (EC) plans to make a one-off cut to the number of carbon permits as part of planned reforms to its emissions trading system (ETS), in order to ratchet up pressure on polluters, Bloomberg reported on June 27 citing the draft of a proposal.
The EU executive also intends to reduce the number of permits entering the ETS each year at a faster but yet-as-unspecified rate. The aim is to strengthen the ETS' "market stability reserve," ensuring against a buildup in permits that might put downward pressure on prices. This reserve will absorb permits above a 833mn threshold of those in circulation. When there are more than 1.096bn spare permits, the reserve will absorb 24% of the surplus each year until 2030.
The EC is expected to publish its proposal next month, but EU member states and the European Parliament will then have to negotiate the legislation before it is enacted, and during this process it will likely undergo changes.
Modern gas-fired power generation could benefit from the reforms in markets where a lot of coal is still burnt. The document seen by Bloomberg also confirmed that the EC intended to include shipping in its ETS system, which could be a boon for LNG-powered marine transport.