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Estonian politicians favor reducing price of CO2 quotas

EU Emissions Trading System (EU ETS) is part of the EU's policy to combat climate change and its key tool for reducing greenhouse gas emissions.
EU Emissions Trading System (EU ETS) is part of the EU's policy to combat climate change and its key tool for reducing greenhouse gas emissions. Source: Marius Schwarz, Caro / Scanpix

Polish Prime Minister Mateusz Morawiecki has proposed freezing the price of CO2 quotas between €25 and €30 per ton. The price of emission allowances in the European emissions trading system (EU ETS) recently reached a record high of €96 euros per ton. Estonian policymakers agree that the price of emission allowances could be reduced.

Minister of Economic Affairs and Infrastructure Riina Sikkut (SDE) said that the pricing of emission allowances must be adjusted and that the proposal from Poland could be one way to go forward.

"The government has not specifically discussed or taken a position on this plan, but its timing and nature are perfectly understandable. Next week, the energy ministers will hold a special session to discuss the overall electricity market and, possibly separately, the quota price," Sikkut said.

"There is an undeniable expectation in the energy and economic sectors that CO2 prices will become more predictable and reasonable and that they will not rise as sharply. Whether it's the Polish proposal or any other option on the table, the opposing side rather wants to focus on building more renewable energy capacity," the chair of the Economic Affairs Committee of the Riigikogu Kristen Michal (Reform) explained.

The former Minister of Economy and Infrastructure Taavi Aas (Center), who is currently in opposition, has previously sent a letter to the European Commission with a similar proposal.

"Estonia began this initiative a year ago, when I filed a letter to the Energy and Environment Commission stating that the quota system is ineffective and needs to be revised. Now there is a rising support for this proposal in Europe and I am very pleased that other European nations are also beginning to think in this direction, namely, that the quota system needs restructuring. This gives us hope that the amendments to the quota system might be implemented," Aas said.

The emission allowance system was introduced to encourage the development of renewable energy.

"When CO2 quotas were first implemented, the situation was very different from now. We no longer appeal to the fact that fossil fuels are inexpensive and readily available, nor the fact that renewable energy solutions are prohibitively expensive and non-market-friendly and so they cannot be developed," Sikkut explained.

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Editor: Kristina Kersa

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