New Deal on Emission Trading System and Social Climate Fund
The EU Emissions Trading System (EU ETS) is a carbon market based on a system of cap-and-trade of emission allowances for energy-intensive industries and the power generation sector. It is EU’s main tool in addressing emissions reductions, covering about 40% of the EU’s total CO2 emissions. The Council and Parliament have agreed to increase the overall ambition of carbon emission reductions in the sectors covered by the EU ETS to 62% from the original 55% by 2030. This change will be supported with EU’s Modernization, Innovation and Social Climate Funds.
The Council and the European Parliament have reached a provisional political agreement on important legislative proposals of the ‘Fit for 55’ package that will further reduce emissions and address their social impacts. The co-legislators have agreed to a rebasing of the overall emissions ceiling and increasing the annual reduction rate of the cap by over 4% per year. The market stability reserve will also be strengthened by increased annual intake rate of allowances to reduce excessive price fluctuations in the market.
Installations that currently benefit from free allocations will need to comply with conditionality requirements in the form of energy audits and for certain installations climate neutrality plans. Additional transitional free allocations can be granted under certain conditions to the district heating sector in certain member states, in order to encourage investments into decarbonizing that sector. The co-legislators agreed to delete the derogation for installations for electricity generation and move the remaining allowances into Modernization Fund to support modernization, diversification, and sustainable transformation of the energy sector. Over a nine-year period between 2026 and 2034, the free allowances in these industries – cement, aluminum, fertilizers, electric energy production, hydrogen, iron and steel – will be phased out.
Both the Modernization Fund and Innovation Fund will be funded through the auctioning of additional carbon emission allowances. A new Social Climate Fund will be established to support vulnerable entities to cope with the price impacts of an emissions trading system for the buildings, road transportation and fuels for additional sectors. Each member state will need to submit a ‘social climate plan’, containing the measures and investments on e.g. the decarbonization of heating and cooling in buildings.
WOIMA is already prepared to meet this decarbonization challenge in power generation, whether in electricity generation, or district heating and/or cooling. Our carbon-neutral waste-to-value solution is a combination of the modular, pre-engineered, and prefabricated wasteWOIMA® waste-to-energy power plant and ccWOIMA carbon capture plant. Together they provide carbon-neutral, or even carbon-negative, energy, as well as clean CO2 for further utilization in the power, chemical, construction, and food industries.
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WOIMA Corporation is a Finnish supplier of best-in-class waste-to-value products, projects and services worldwide. We have developed solutions that enable us, and the customer, to transform and recycle virtually any waste stream into raw materials and energy. At WOIMA we combine Finnish engineering know-how in waste management with power generation design expertise. These solutions are used in Finland every day. They support the circular economy ideology and ensure that less than 1% of Finland’s waste ends up in landfills.
Our mission is to improve quality of life both locally and globally, as well as empower people to utilize waste as a commodity. Our decades of international project management experience ensure an on-time, in-budget and high-quality WOIMA solution delivery across the globe.