BERNSTEIN Utilities Daily – July 16th

Research evidence excerpt

BERNSTEIN Utilities Daily – July 16th

icy. The intervention comes as the commission prepares to unveil its comprehensive

emission trading system review on July 17, a package expected to recalibrate the market stability reserve, extend free allocations with

investment conditions, and inject 400 million allowances into the market through an investment booster running from 2028-2031.

The coalition’s central demand is to flatten the pace at which the EU allowance cap shrinks. The joint statement argues the current

system, which requires energy and industry sectors to reach near-zero emissions by 2039, “will push industries out of Europe.” Poland

wants the annual linear reduction factor to fall to just over 2% from the current 4.4%, ensuring allowances aren’t exhausted until

closer to 2050.

• EU Set to Slow Carbon Cuts to Give Industry More Time to Adapt (Bloomberg). The European Union is set to slow cuts to

emission limits in its flagship carbon market over the next decade, giving heavy industry more time to rollout clean technologies while

keeping the bloc on track for climate neutrality by 2050. In a planned overhaul of its Emissions Trading System due to be published

later this week, the EU is seeking to strike a balance between lowering the burden of the transition for the industry and encouraging

those who decarbonize faster to keep investing in Europe. The reform has risen to the top of the bloc’s political agenda as some

governments and energy-intensive companies blame the carbon market for boosting the already high power and gas prices. The

European Commission is considering lowering the rate at which the emissions cap shrinks every year to a yet-to-be-determined

number within the 3.5%-3.9% range in 2031-2035, according to people familiar with the matter.