Supporting the Implementation and Development of the EU ETS

PROJECT DESCRIPTION

BACKGROUND

In the context of the Roadmap 2050 and the 2030 Climate and Energy Policy Framework, the European Commission published a proposal for a revision of the EU Emissions Trading System (ETS) Directive that will be applied in 2021. The proposal identifies the following improvements to the directive:

the implementation of robust, comprehensive, detailed and up-to-date ex-post economic assessments of the functioning of the EU ETS, including its impact and interactions with other climate and energy policies;

the implementation of a high-level, international and diverse network of experts able to interact with policy-makers to provide feedback on the design and implementation of the EU ETS;

information to policy-makers in an accessible and usable form; and

ad hoc training that contributes to capacity building through the creation of a sound knowledge base for policy-makers on the economic issues associated with the design and implementation of the EU ETS.

OBJECTIVES

The overall aim of the LIFE SIDE project was to support EU and Member State policy-makers who will be contributing to the design and implementation of the new EU ETS legislation. It aimed to provide them with the very best information on the economic functioning of the scheme to facilitate effective communication with stakeholders. Specifically, the project aimed to:

produce and deliver knowledge and information on the economic functioning of the trading scheme, focusing on the four areas where legislative action is foreseen: free allocation of emission allowances, impact on innovation and investment, interaction with energy policies and macroeconomic effects;

create a forum for a constructive policy dialogue among the different policymakers and stakeholders involved in the four areas described above; and

bring together EU ETS experts and create a network that, together with the resources resulting from this project, will represent a knowledge hub and a point of reference for policy-makers involved in the design and implementation of the trading scheme.

RESULTS

The LIFE SIDE project achieved its objective of supporting the EU, Member States and policy-makers involved in the design and implementation of the new EU ETS legislation. During the first stage of the project, the team provided relevant information to help update the new ETS regulation. When the legislation came into force – the fourth phase of the EU ETS occurred during the project – activities focused on the potential development of the ETS internationally. Specifically, the project team carried out an economic assessment of the past decade of implementation of EU’s ETS. The assessment focused on five different aspects of the legislation, namely free allocation of emission allowances, impact of the EU ETS on investment and innovation, interaction between energy policy and the EU ETS, macro-economic effects as well as the ETS international dimension, which became a crucial issue following the Paris Agreement. This assessment is expected to become a reference text on the topic in the future both for the academic community and policy-makers. Four policy briefs on the above-mentioned assessed crucial elements of the legislation were produced targeted at policy-makers, helping them navigate through the EU ETS current design and prospective future reforms.

Notably, the team also established a group of experts from European Institutions, academia, NGOs and private companies to be in charge of supervising the activities and creating a link with the relevant national and European policy-makers, who could benefit from the project results.

Finally, the project team carried out specific training activities and workshops with the aim of raising awareness of the selected participants (representatives from industry, NGOs, international institutions, academics and EU policy-makers) on the ETS mechanisms and the impact of this legislation on the EU climate policy framework. The team also initiated ‘Florence process’ with the aim of establishing consolidated and permanent dialogue among the major international players. The goal is play a role in shaping developments of EU ETS and enhancing its international dimension.

An effective communication campaign was carried out to disseminate the project outcomes and this effort will continue to ensure the long-term sustainability of the project.

Further information on the project can be found in the project's layman report and After-LIFE Communication Plan (see "Read more" section).