Twelve EU Nations Push to Boost Carbon Fund for Poorer States
(Bloomberg) -- A group of 12 European Union countries urged the bloc’s executive to bolster a fund financed through the carbon market which supports poorer member states in the transition away from fossil fuels.
In a letter to the European Commission, countries including Greece, Hungary, Latvia and Poland called for scaling up financing under the Modernization Fund in the post-2030 period as part of an upcoming review of the bloc’s Emissions Trading System. The commission is due to unveil a reform of the carbon cap-and-trade program on July 15.
The EU ETS has moved to the top of the bloc’s political agenda as the Middle East conflict exacerbated concerns over Europe’s declining competitiveness and some governments criticized carbon pricing for contributing to high energy costs.
“In the current political and economic context, characterized by increased geopolitical risks and uncertainty, predictable financing mechanisms remain an essential condition for the success of the energy transition in the EU,” the alliance said in a letter seen by Bloomberg News.
The July review is set to adjust the carbon market to a new climate goal of reducing 90% of greenhouse gases by 2040 compared with 1990 levels. The call by the coalition, which also includes Croatia, Bulgaria, the Czech Republic and Estonia, highlights the emerging battle lines in what is shaping up to be a heated debate on the final shape of the reform.
The Modernization Fund is financed by proceeds from carbon emissions trading to help lower-income EU countries invest in cleaner energy and improve efficiency. The commission estimates its total revenues in the 2021-2030 period at €57 billion, assuming carbon prices of €75 a metric ton. Benchmark emissions contracts traded at around €80 on Monday.
The signatories of the letter also include Lithuania, Romania, Slovakia and Slovenia.
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