Measures to overhaul the European Emissions Trading System, including a €12bn innovation fund and speedier reductions in allowances, have been approved by EU countries, reports Business Green.
The decision must now win full backing from EU bodies. The reforms under debate are expected to reduce the number of allowances and bolster carbon prices.
The ETS aims to cap GHG emissions from energy and industry, by setting an emissions budget or allowances managed through permits. Firms that need to emit beyond this can purchase further allowances, or permits to emit, by trading with those which have emitted less. However, a glut of carbon permits has driven carbon prices down since 2008, and weakened the scheme.
A portion of auctioned allowances, forming a €12bn innovation pot, is expected to fund novel low-carbon technologies and processes, carbon capture and storage, and demonstration projects of innovative renewable energy technologies.
Whether products substituting carbon intensive material should be an additional recipient is still under debate.