The reform of the EU Emissions Trading System (ETS) has been approved by the European Parliament. This means that the road is now paved for the gradual extension of the ETS to emissions from all transport modes. This is great news for the rail freight industry, as it will eventually result in a more level playing field. 

The EU Emissions Trading System (ETS) is a policy tool dating from 2005. It sets a cap on the permitted greenhouse gasses that installations can release, while at the same time granting permits to companies for purchasing, or trading carbon units. These permits are reduced over time as an incentive for companies to switch to greener energy sources.

As the legislation is outdated, it is being revised. The revision is part of the Fit for 55 legislative package and has already been in process for several years. In June last year, European Union Environment ministers agreed on a general approach for the reform, with the extension to other modalities as one of the main turnarounds.

Level playing field

Under the new ETS, a carbon price is included in road and maritime transport and free allowances to aviation will be phased out by 2027. Rail already covered most of its external costs, partly by paying for ETS allowances. Customers of road transport and aviation currently do not pay for the full amount of carbon emitted.

“This will not only help to level the playing field across all modes of transport but offers a unique opportunity to reduce the European Union’s reliance on imported fossil fuels thanks to a wider uptake of energy-efficient mobility options and a quicker deployment of renewables in transport”, commented the Community of European Railway and Infrastructure Companies (CER).

Next step

A further step towards sustainability would be the extension of the EU Taxonomy for Sustainable Finance Initiative to all modes of transport, the CER says. The obligation to invest ETS revenues in climate-friendly activities constitutes another major result. The next step should be crediting railway projects for the CO2 they save”, CER Executive Director Alberto Mazzola commented.

Read this article for a full explanation on the ETS.