Prague – The Czech Republic has submitted requests to the European Commission (EC) for modifications to the emission allowances trading framework for transportation and building heating, known as ETS 2. This document has been endorsed by 17 other EU member states, as announced by the Ministry of the Environment in a press release today. The states are advocating for measures such as regular updates on the advancement of renewable energy implementation and the creation of a mechanism to mitigate price fluctuations of allowances.
Efforts to garner sufficient EU support for the Czech proposal to eliminate or delay the ETS 2 system have not been fruitful. Prime Minister Petr Fiala (ODS) stated, “The Czech Republic is thus taking measured steps and has prepared a joint document, a non-paper, outlining specific adjustments to ETS2, which has already received approval from a significant majority of union states, demonstrating that our concerns are shared.”
The aim is to ensure that EU climate policies are ambitious yet socially acceptable and economically viable, avoiding adverse effects on households and businesses, as emphasized by Fiala. Countries like Germany, Italy, Spain, Poland, Austria, and Belgium have backed the document.
The states are seeking predictable pricing for emission allowances. One of the document’s five proposals includes the timely initiation of auctions in 2026, which, according to the Ministry of the Environment, would alleviate price uncertainty for 2027. Additionally, the states demand enhancements to the Market Stability Reserve (MSR) tool. Minister of the Environment Petr Hladík (KDU-ČSL) explained, “This would allow for the release of more allowances into the market than currently planned, with the capability to introduce additional allowances whenever necessary, rather than just once annually. The intention is also to raise the threshold for allowance prices to 45 euros, beyond which more allowances will be introduced to help lower the price.”
The states also propose the establishment of a mechanism to prevent increases in allowance prices, ensuring stability at the end of the emission period from 2030 to 2033. Alongside changes to the MSR, they are advocating for amendments to sections of the directive governing the ETS allowance system that dictate market release conditions and the quantity of allowances. (July 2)
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