EU countries need to invest more Emissions Trading System (ETS) revenue into supporting industrial decarbonisation investments, says European Commission President Ursula von der Leyen. The Commission meanwhile aims to resolve grid bottlenecks to allow clean energy to flow freely to demand areas, and to help facilitate reduced national taxes on energy.
At EU level, 100% of ETS revenues are re-invested in industrial innovation. The €100 billion ($119bn) Industrial Decarbonisation Bank is an example of that, with the first pilot auction worth €1 billion to be concluded next week. “It will finance the decarbonisation of how you fire furnaces, melt metals or mix chemicals,” Von der Leyen said during Wednesday’s Antwerp European Industry Summit.
However, member states invest less than 5% of ETS revenues in industrial decarbonisation, Kallanish notes. The Commission President said she plans to raise the topic during Thursday’s Alden Biesen summit with EU leaders.
“Channelling more ETS revenues back to industry will therefore be a core focus of the upcoming reform of the Emissions Trading System this summer. Because these resources come from the industry and they must be reinvested in the industry itself, where the money comes from,” she noted.
Energy price spikes in one country should be avoided by allowing cheaper energy to flow across borders, something the European Grids Package announced in December aims to achieve. This involves fast-tracking the construction of so-called Energy Highways across Europe. As an example, the Bornholm Energy Island will connect offshore wind from the Baltic Sea to the Danish and German national grids, transforming Baltic wind into “shared European power”, von der Leyen noted.
“We will tackle all these bottlenecks – one by one. The goal is simple. Clean energy must flow freely all across our Union so that cheap energy can flow where it is needed, when it is needed,” she added.
Besides reducing national taxes on energy to bring down prices, power-purchase agreements and contracts for difference should be rolled out across all members states to lock in energy prices for the long term, she continued.
Von der Leyen also mentioned the Industrial Accelerator Act, which will be presented later in February. This will introduce specific EU content requirements for strategic sectors, including low-carbon requirements in public procurement. “And of course, this will be based on rigorous economic analysis. But it will create a stable demand for industries, and it will kick off a virtuous cycle of growth,” she concluded.
Eurofer said on Wednesday that EU policymakers must restore electricity prices closer to pre-energy crisis levels while implementing reforms to stabilise markets (see separate story).
