Oct 26 2015

Environment Ministers exchange views on ETS Innovation Fund

Luxemburg, which holds the Presidency of the EU until the end of the year, asked the other Member States (Presidency Note), “Are the proposed low carbon funding mechanisms for industrial innovation and energy sector modernisation a sufficient stimulus for public and private investments needed to achieve the 2030 climate target?”

They presented their answers during three-minute contributions to today’s Orientation Debate on the EC’s proposals for the Emissions Trading System 2021-2030. In most cases, Member States’ comments briefly covered ETS Innovation Fund, which is one component of the future ETS.

Technology choices

The UK singled out CCS and RES as its priorities for the new fund. Support for CCS came from Slovakia, but Poland’s representative said, “Instead of supporting CCS, which I personally have doubts is climate-friendly, we should develop CCU.” Slovakia supported CCU (carbon capture and use), too.

France and Sweden want to stop support for fossil fuels, with Sweden saying (via interpretation) “Investments in fossil fuels are a blind alley — a dead end — that will make it more expensive to achieve our objectives. We need to focus on renewables, energy efficiency and infrastructure.” The same three items were mentioned in that order by Germany. Both Germany and Denmark wanted to link ETS Innovation Fund to achieving long-term climate targets.

Finland said, “The Innovation Fund has important role in funding investments in new innovative technology based on renewables.” Sweden spoke up for advanced biofuels specifically.

Ireland, Germany, Austria, Bulgaria, Lithuania and Finland explicitly endorsed the broadening of the scope of ETS innovation funding to industry.

Small = small

Small Member States call for small-scale projects: Slovenia, Austria (the two countries that pressed for the derogation that became NER300’s Article 6(2)) and Latvia, Cyprus and Malta (Malta via a re-interpretation of what it means for a project to be ‘innovative’).

Another way for small Member States to try to get projects is to call for a mechanism that distributes projects evenly (or at least, more evenly than an open competition) between territories. This is called for by Bulgaria, Lithuania and Slovakia.

No to Delegated Acts

According to the EC’s proposals, ETS Innovation Fund will be implemented through a Delegated Act, a piece of legislation negotiated directly between technical staff in the European Commission and civil servants from national administrations. Portugal and Latvia called for the text of the ETS Directive (as opposed to Delegated Acts) to include more detail on the functioning of ETS Innovation Fund, and Hungary and Portugal called for less use of Delegated Acts in general in the ETS revision process.

Other sources of funding exist

Poland and Spain pointed out that other instruments exist at EU level to fund innovation. This fact did not trouble Slovenia, which said it was still feeling the effects of the economic crisis and that ETS Innovation Fund would be a welcome source of funding. France even said the budget of ETS Innovation Fund could be swelled by putting into it allowances that, under the EC’s proposals, would go to industries that are not at significant risk of carbon leakage.

Estonia was not represented in the debate, although in a public consultation on the revision of the ETS that closed on 16 March this year, as part of a longer comment it said, “the new fund should still follow the principle of even geographic allocation of the available financing”.