At the Council of Environment Ministers on Tuesday, Luxembourg’s Minister of Environment, Carole Dieschbourg, called for a credible carbon trading system following protracted discussions at the Council tha led to a political agreement on reform of the European Carbon Market for the period 2021 to 2030.
In her speech, Minister Dieschbourg stressed that the European Union (EU) must make progress in the implementation of the Paris agreement and added, "We are now facing to a system that obviously does not work. The surplus of quotas is extraordinary, the prices of quotas are at a derisory level. We need a credible system that provides incentives for sustainable investment that encourages energy efficiency measures and the use of renewable energy sources. "
The objective of the reform is to make the most important market instrument available to the European Union to achieve its climate objectives by 2030 (a reduction of at least 40% in greenhouse gas Compared to 1990) while protecting the industrial sectors most exposed to the risk of carbon leakage and international competition, subject to a conditional increase in the percentage of allowances allocated free of charge.
Luxembourg supported reforms that would boost the price of carbon, which is low thanks to surpluses in the market caused by the retraction of the European economy after 2008.
Following in particular a proposal put forward by Luxembourg, together with France, the Netherlands and Sweden, Environment Ministers voiced their support for a strengthening of the market stability reserve (MSR). Thus, the MSR feeding rate will be doubled and the MSR size will be limited, with some of the surplus quotas being permanently withdrawn from the system from 2024 on an annual basis. These measures will help to strengthen the price of carbon.
While regretting that the European Semester does not link to Agenda 2030 and the Sustainable Development Objectives which nevertheless address macroeconomic policies, the Minister of the Environment welcomed the review of the implementation, "I am very pleased that this initiative is somehow born during the Luxembourg Presidency of the Council of the European Union in 2015 and Luxembourg will continue to support this project in the future."
The Minister proposed that the review of the implementation of environmental policy plays a major monitoring role for the Member States and is extended to the climate and chemical components, and called for a more coherent approach to the challenges countries face.
Image: Minister Carole Dieschbourg in 2016
