Paris Agreement to enter into force on 4 November
Mark Abdilla Meusac executive
On 17 October, ministers responsible for the environment focused on the proposal relating to the various sectors which are not governed by the Emission Trading System (ETS). These sectors include transport, construction and waste.
The EU’s ETS is an important factor in the EU’s policy to combat climate change and is considered a key tool to help reduce greenhouse gas emissions in a cost-effective manner. According to the ETS handbook, this system has contributed to the limitation of emissions from over 11,000 heavy energy-using installations, such as power stations and airlines.
The ETS limits emissions through the implementation of the cap and trade principle. Caps are set on the total amount of certain greenhouse gases which are emitted by the installations covered by the ETS. Companies may then trade caps amongst themselves, in accordance with their annual emission projections, to ensure compliance with the regulations governing the ETS. The ETS currently covers around 45% of the EU’s total emissions. The ETS operates in all 28 member states, Iceland, Liechtenstein and Norway.
The ETS is divided into phases, each phase representing a time period in the ETS’s life cycle. With phase 1 starting in 2005, the ETS is currently in its third phase. The fourth phase is expected to start in 2021. Whilst the ETS is currently applicable to the energy and aviation sectors, current discussions are aimed at extending this to incorporate the transportation, construction and waste sectors during the fourth phase.
It also envisaged that the extension of the ETS would contribute towards the international community’s targets in relation to the Paris Agreement. At the Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC) held in Paris last year (COP21), countries agreed on the long-term goal of keeping the increase in global average temperature to below 2°C above pre-industrial levels. In addition to this, the main objective is to limit the temperature increase to 1.5°C, as this is seen as the best way to reduce the risks and impacts of climate change.
The EU has been at the forefront of the international climate change debate and was the first major economy to submit its intended contributions to the Paris Agreement. In fact, in March 2015, the EU had pledged to reduce greenhouse gas emissions by 40% of the emission levels of 1990. The aim is to achieve this reduction by 2030.
Malta ratified the Paris Agreement on 5 October, 2016, along with the EU itself and Austria, Germany, Hungary, Slovakia, Portugal and France. As a result, the Paris Agreement can now come into force. In fact, this will occur this coming 4 November. EU member states are pledged to work towards the EU’s commitments. Certainly, the ETS will heavily contribute towards the potential success of the EU’s objectives, and the extension currently being discussed targets various sectors which fall within the parameters of the EU’s commitment. It is an important system which allows fair regulation of emissions across the targeted sectors. The EU has also set up the Innovation and Modernisation Fund to help the industry and the power sectors meet the innovation and investment challenges of the transition to a low-carbon economy.
Climate change continues to pose a great threat to the world’s future and the Paris Agreement was a much-needed step to finally push the issue at the top of the international agenda. Within the EU, the ETS will certainly play an important role in achieving a significant reduction of emissions, however, all member states must be fully committed to achieving this goal to allow the EU to remain a leader in the battle against global warming.