15 suggestions for EU ETS aligned with the 1.5 degree target

The business network Haga Initiative presents 15 proposals on how EU emissions trading scheme can be tightened to be in line with the Paris Agreement. Raising climate ambitions can contribute to more green jobs and be part of the EU’s green recovery plan.

EU ETS includes almost half of the emissions from the European Union. It is one of the world’s most extensive schemes to abate emissions, yet it is not aligned with either the Paris Agreement or the 1.5 degree target.

– Delivering on the Paris Agreement’s 1.5-degree ambition requires raised ambitions within the EU ETS. With today’s regulations, the emission cap will reach zero in 2058. This is not enough. The Haga Initiative’s proposals raises the ambition and contributes to the EU’s recovery plan following the Corona pandemic, says Nina Ekelund, Executive Director of the Haga Initiative.


For the EU ETS to contribute to reaching the 1.5-degree target in the Paris Agreement, the Haga Initiative proposes, inter alia:

● Increase the rate of emission reductions. The linear reduction factor needs to be adjusted from 1.74 percent to 4.5 percent. If the EU does not raise the level of ambition by 2021, the pace needs to increase even more in the next trade period.

● Negative emissions require their own mechanism. Companies are working towards negative emissions and therefore it is important to discuss whether the companies should be able to account on the climate benefits. Today’s policy means that emissions cost, but there is no corresponding compensation for carbon sinks. Negative emissions or carbon sinks should have their own mechanism, possibly an EU-harmonized reverse auction.

● Investigate alternatives to free allocation of allowances. Since the start of EU ETS, carbon dioxide-intensive operations have been granted free allocation through the EU Commission. The purpose is to avoid corporate escape to countries with less rigorous climate legislation. At present, there are shortcomings in the free allocation and there is a need to review alternative regulations that better reflect the actual costs of emissions. An alternative to free allocation may be carbon board adjustments.

Read the entire report here

Press contacts:
Nina Ekelund, Executive Director, Haga Initiative, +46 735 022 464

Deniz Butros, Strategist, Haga Initiative, +46 764 271 580

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