How to optimise the EU ETS transition funds?
Analysing options for Article 10c derogations, the Modernisation Fund, and for Solidarity & Growth provisions
About
This year, several EU Member States must make critical decisions on the implementation of the EU Emissions Trading Scheme (EU-ETS) for the whole of Phase 4 (2021-2030). Specifically, qualifying Member States, mostly in Central Eastern Europe, must notify the EU Commission on decisions regarding their use of the Article 10c derogation, the Modernisation Fund and the Solidarity Provision. The deadline for this is 30th September 2019.
Executive summary
Analysing Article 10c, the Modernisation Fund, and Solidarity & Growth provisions
The Modernisation Fund offers much better investment prospects than Article 10c
Power & Carbon Analyst, Ember
We already know that the Article 10c derogation cannot be used to subsidise coal investment like it was in this decade, but the criteria for its use in the next phase of the ETS are so strict that governments should instead transfer those allowances to maximise the Modernisation Fund. The Modernisation Fund could be a very influential source of funding for cutting emissions in Central and Eastern Europe. On our calculations, the fund could be worth €50 billion in the next decade if the ten eligible countries choose to maximise their contribution.
