Could a CO2 emissions performance standard fix the EU ETS?

A CO2 emissions performance standard could be the solution to fixing the EU ETS , argue Bas Eickhout and Peter Eriksson.

When you look at the EU's climate and energy policy, it is no wonder that we're not seeing a phase-out of the dirtiest energy sources. 

The instrument that should ensure that our power generation is cleaned up is the non-functioning EU ETS. The price of ETS allowances is extremely low due to a huge surplus, hindering the fuel shift from coal to cleaner energy sources.

Even with a low price for ETS allowances, we can incentivise fuel-shifts. The solution is a CO2 emissions performance standard - EPS - per KWh of generated electricity for power plants.


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Such a standard, complemented with a clear trajectory to reduce levels over time, will ensure a predictable decarbonisation pathway for the power sector in the coming decades, regardless of the ETS price.

The US has also already implemented an EPS for new power plants and a process for implementing one in existing plants is ongoing.

A good thing about this solution is that power plant operators are already used to it. Emissions performance standards are after all nothing new in Europe.

Combustion plants already have to fulfil emission requirements for SO2, NOx and dust under the industrial emissions directive (IED). Why not extend it to CO2?

An emissions performance standard is technology neutral, so strangely enough it also forms a huge opportunity for the coal industry.

 

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