en.Wedoany.com Reported, The European Union plans to revise its carbon market mechanism in the short term to help curb high electricity prices but will keep key parameters controlling the market's supply unchanged. European Commission President Ursula von der Leyen stated this month that the Commission will address the carbon component in energy prices.
According to informed sources, the European Commission will unveil a proposal on Wednesday that maintains unchanged the quantitative threshold and absorption rate for removing carbon allowances from the market. The sources indicated that the only change is the removal of certain allowance expiry clauses, allowing more allowances to remain in the reserve to serve as an intervention tool against price shocks.
Member states are concerned that high energy costs will further burden companies, which are already facing greater pressure from energy prices compared to competitors in the United States and China Chemical Engineering. Europe's plans to revitalize its manufacturing industry and enhance global competitiveness largely depend on reducing energy costs.
Earlier this month, carbon futures prices fell to near one-year lows due to market concerns that EU governments might take aggressive measures to lower carbon prices. The Market Stability Reserve mechanism, operational since 2019, is designed to automatically control the supply of circulating allowances. Current regulations stipulate that allowances exceeding the 400 million threshold in the reserve expire on January 1 each year.
The EU will also announce a proposal on Wednesday to update carbon efficiency benchmarks, which are used to determine the number of free allowances companies receive under the Emissions Trading System. While new benchmarks need to reflect technological advancements, informed sources said the Commission will utilize legal flexibility when determining values for the 2026-30 period. Energy-intensive industries are calling for a freeze on benchmarks to avoid stringent adjustments that could lead to plant closures.
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