EU to Vote on ETS Reform, Pennsylvania RGGI Inclusion Faces Opposition
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The European Parliament’s environment committee is scheduled to discuss and vote on proposed amendments to the EU ETS reforms, known as the “Fit for 55” package, week of May 16th. Attention will focus on proposals for a one-time adjustment to the overall EU ETS cap, a steeper annual reduction in the cap, as well as measures to stiffen the Market Stability Reserve.
The UK government has asked the operators of the country’s three remaining coal-fired power plants – Drax, Uniper and EDF – to continue operating these plants past their scheduled closure date in September, to reduce the country’s dependence on more expensive natural gas.
The government has also begun a consultation on the reform of the UK ETS from 2024 to 2030. The regulator currently envisions a cap for the period of between 887-936 million tonnes, and “is minded” to implement the higher figure, which it says will still keep the market on track to achieve net-zero emissions by 2050. The current 2024-2030 cap is 912 million tonnes.
The State’s Air Resources Board published a set of modeling scenarios targeting carbon neutrality by either 2045 and 2035 and indicated at the same time it would formally propose to reach neutrality by 2045.
The news garnered little market reaction, indicating the 2045 deadline was the expected outcome.
The eventual adoption of the carbon-neutral timeline will likely trigger legislative amendments to the state’s low carbon fuel standard as well as the cap-and-trade market in 2023.
The market is seen as well-supported by utility buying, as power generation is set to continue to depend on more carbon-intensive fuels, including oil, well into the summer.
There is a note of caution surrounding the ongoing challenges to Pennsylvania’s entry into RGGI, currently expected for the start of the third quarter.
Any delay to the state’s debut could be seen as bullish since Pennsylvania would have the largest allocation of all participating states, and its entry is seen as bringing additional supply to the market.
The state’s high court is due to begin hearing arguments for and against the state’s entry into RGGI today. Coal interests and Republican lawmakers are seeking an injunction to prevent the state RGGI regulations from becoming law.