Czech push to reform emissions allowances: They work but need modernisation, von der Leyen says

Brussels, 20 March (CTK correspondent) – European Commission President Ursula von der Leyen said the EU Emissions Trading System (ETS) works. But it needs to be modernised and made more flexible, she told a press conference after the EU summit. The European Commission therefore wants to focus on the four main areas that determine electricity prices: generation costs, charges for networks and the transmission system, taxes and levies, and the cost of emissions allowances.

Von der Leyen largely repeated proposals she had outlined earlier, including in a letter at the start of this week. She urged EU countries to use existing EU rules to cut taxes and apply state aid rules more flexibly to support businesses and households in difficulty.

She said the Commission would also present a legislative proposal to reduce network charges for “sensitive sectors” and work with member states to create “national schemes” to ease price pressures.

Given the rise in energy prices, von der Leyen said, measures were needed that are “temporary and targeted” and provide citizens and companies with “immediate relief”.

Among those calling for changes to the EU ETS is Czech Prime Minister Andrej Babiš. Czechia will continue to seek allies for its proposals, which include exempting energy-intensive industry from the emissions trading system until 2034, he said after the end of Thursday’s summit.

Speaking overnight after the EU summit ended, Babiš said the Commission would present a proposal to revise the emissions trading system by June. “We managed to secure a change from the original July deadline, so that the European Commission will prepare a concrete plan for revising the directive on emissions allowances ... and it will be on the agenda of the European Council in June,” he said.

Czechia also succeeded in getting a reference to energy-intensive industry into the summit conclusions. “At the same time, targeted solutions are needed in the short term to ensure affordable energy, taking into account technological neutrality and the specific situations of member states, the particular exposure of some industrial sectors to the risk of relocation, and the need to improve conditions for innovative energy-intensive sectors without undermining predictability and a level playing field,” the document states.

The ETS is designed to encourage companies to reduce emissions. Companies must buy allowances for every tonne of CO2 they emit. The more they emit, the higher their costs, making investment in cleaner technologies worthwhile. Von der Leyen has previously said that the ETS remains “a proven tool for supporting the transformation of industry”.