Changes from plenary report to adopted text

Change 1

AddedRecital 1 a (new): (1a) The conclusions of the European Council of 12 December 2019 endorse the objective of achieving a climate-neutral Union by 2050, in line with the objectives of the Paris Agreement.

RemovedRecital 1 a (new): (1 a) The conclusions of the European Council of 12 December 2019 endorse the objective of achieving a climate-neutral Union by 2050, in line with the objectives of the Paris Agreement.

Change 2

ChangedRecital 3 a (new): (3 a)(3a) The implementation of the emissions trading system for the buildings, road transport and additional sectors needs to be accompanied by complementary decarbonisation measures which are the most effective tool for helping households reduce fossil fuel dependency and therefore mitigating the impact of the ETS2 on consumers, given that fuel demand in buildings and transport remains largely inelastic in the short term. Member States are obliged to use the revenues from the auction of allowances for the purposes pursuant to Article 30d(6) of Directive 2003/87/EC, giving priority to activities that can contribute to addressing the social aspects of emissions trading under ETS2. Therefore, it would be appropriate for Member States to use the revenues from the auctioning of allowances released from the reserve to complement their Social Climate Plans. It is equally important that the Commission complements its analysis of the final updated National Energy and Climate Plans by identifying, for each Member State, sectoral decarbonisation measures and a better use of ETS revenues that could help reduce the demand for ETS2 allowances. It is also important to strengthen the EIB Frontloading Facility and to consider additional measures to increase the budget of the Social Climate Fund to ensure that financial support is provided to households in a timely manner and at a level that reflects the evolution of the ETS2 prices. It is necessary for the Commission to consider prolonging the …d…

Change 3

ChangedRecital 6 a (new): (6 a)(6a) Excessive allowance price levels within the emissions trading system for the buildings, road transport and additional sectors could still have disproportionate impacts on vulnerable households, while excessive price fluctuations might not be limited to an occurrence twice a year. In the context of the review of Directive 2003/87/EC of the European Parliament and of the Council, it is essential that further social safeguarding measures be considered, and it may be appropriate for stronger price curtailment instruments to be considered by the Commission to guarantee price stability in the long term. In this regard, the Commission could consider a list of options such as strengthening and prolonging beyond 31 December 2029 the excessive price increase mechanism of EUR 45 set in 2026 prices, and adapting the market stability reserve accordingly, including the frequency and volume of releases of allowances and the volume in the reserve, if necessary, assessing the feasibility of allowing Member States to temporarily not apply the system to residential buildings by way of derogation, provided that they demonstrate that they can achieve the effort-sharing targets by putting in place other measures and provided that they have transposed Directive (EU) 2024/1275 of the European Parliament and of the Council in national law, ensuring the possibility to use revenues from emissions trading for direct support, such as climate dividends, without having to prove a positive environment…environmenta…

Change 4

ChangedRecital 6 b (new): (6 b)(6b) Following the revision of the market stability reserve provided for in this amending Decision, it would be appropriate for the Commission to conduct an impact assessment of the emissions trading system for the buildings, road transport and additional sectors to assess its social impact and its impact on meeting the climate goals, as well as a distributional assessment of the number of vulnerable households for which support has been made available from the Social Climate Fund and the EIB Frontloading Facility by that date, including, as feasible, a breakdown by type of geographical area, by income distribution and by gender which needs to also consider additional measures to ensure both environmental integrity and social fairness within the ETS2.

Change 5

RemovedArticle 1 – paragraph 1 – point 1, Article 1a of Decision (EU) 2015/1814: (1) In paragraph 3, the second sentence is replaced by the following: ‘From 1 January 2034, 50% of the allowances referred to in that subparagraph that have not been released from the reserve shall no longer be valid. From 1 January 2036, the remaining allowances referred to in that subparagraph that have not been released from the reserve shall no longer be valid.’

AddedDecision (EU) 2015/1814

Change 6

ChangedArticle 1 – paragraph 1 – point 4 a (new),1, Article 1a of Decision (EU)– 2015/1814:paragraph (43: a)(1) In paragraph 7,3, the second sentence is replaced by the following: / "‘The‘From volumes1 toJanuary be2034, released50% fromof the reserveallowances shallreferred beto evenlyin distributedthat oversubparagraph athat periodhave ofnot threebeen months,released startingfrom nothe laterreserve thanshall 30no dayslonger afterbe thevalid. dateFrom on1 whichJanuary the2036, conditionsthe wereremaining metallowances accordingreferred to the publication in that regard in thesubparagraph Officialthat Journalhave ofnot thebeen Europeanreleased Unionfrom pursuantthe toreserve Articleshall 30h(8)no oflonger Directivebe 2003/87/EC.’"valid.’;

Change 7

AddedDecision (EU) 2015/1814

AddedArticle 1 – paragraph 1 – point 4 a (new), Article 1a – paragraph 7: (4a) In paragraph 7, the second sentence is replaced by the following: / ‘The volumes to be released from the reserve shall be evenly distributed over a period of three months, starting no later than 30 days after the date on which the conditions were met according to the publication in that regard in the Official Journal of the European Union pursuant to Article 30h(8) of Directive 2003/87/EC.’.

Change 8

RemovedArticle 1 a (new): Article 1a / In Article 3, the following subparagraph is added: / ‘Within four years from the start of the operation of emissions trading for buildings, road transport and additional sectors set out in Chapter IVa of Directive 2003/87/EC, the Commission shall carry out an impact assessment, including a distributional impact assessment, and an evaluation of the environmental, social and economic impact of the remaining allowances in the reserve under Article 1a, and determine the appropriateness of partially or entirely invalidating those allowances. That evaluation shall, where appropriate, be accompanied by a legislative proposal.’

AddedDecision (EU) 2015/1814

AddedArticle 1 a (new), Article 3 – paragraph 1 a (new): Article 1a / In Article 3 of Decision (EU) 2015/1814, the following paragraph is added: / ‘Within four years of the start of the operation of emissions trading for buildings, road transport and additional sectors set out in Chapter IVa of Directive 2003/87/EC, the Commission shall carry out an impact assessment, including a distributional impact assessment, and an evaluation of the environmental, social and economic impact of the remaining allowances in the reserve under Article 1a of this Decision, and determine the appropriateness of partially or entirely invalidating those allowances. That evaluation shall, where appropriate, be accompanied by a legislative proposal.’.

RemovedBackground:

RemovedThe proposal is a response to an initiative of 19 Member States from 1 July 2025. In their “Joint non-paper by Austria, Belgium, Bulgaria, Croatia, Czechia, Estonia, France, Germany, Greece, Italy, Latvia, Lithuania, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain on ETS2 price uncertainties and possible improvements”, these Member States expressed their concerns about significant uncertainties regarding future price levels and volatility of the ETS2. The three main concerns included the uncertainty around the initial price level in 2027, the risk of price volatility due to the sharp threshold in the design of the Market Stability Reserve, and the insufficiency of the safeguards against possible high price levels as these could result in substantial negative social impacts.

RemovedTo alleviate the concerns around price uncertainty and social impacts and to strengthen the public acceptance of the system, the 19 Member States proposed the consideration of the following measures: to publish regularly information to better inform price forecasts for ETS2; to launch early auctions to reduce price uncertainty; to smoothen the MSR trigger mechanism to limit volatility, as in ETS1, and increase the released MSR volumes in tight market conditions; to extend the MSR lifetime beyond 2031; and to reinforce the price control mechanism.