Answer given by Executive Vice-President Timmermans on behalf of the European Commission

The European Commission is currently reviewing the EU Emissions Trading System (ETS) and will put forward a proposal for its revision in June 2021 as part of a package of legislative proposals to achieve at least 55% greenhouse gas (GHG) emissions reduction in 2030 compared to 1990 levels. The EU ETS has proven to be an effective tool for reducing GHG emissions: in 2019 emissions from stationary installations under the EU ETS decreased by 9.1%, a decrease mainly driven by the power sector which witnessed reductions close to 15%.

The European Green Deal recognises that, as long as many international partners do not share the same ambition as the EU, there is a risk of carbon leakage as long as climate action in other countries is not on par. Thus, to address this risk, the European Commission will propose a Carbon Border Adjustment Mechanism (CBAM) as part of the upcoming legislative package. The CBAM would constitute an alternative to the free allocation mechanism currently in place addressing the risk of carbon leakage and would target selected energy-intensive sectors. The possibility to apply CBAM to the electricity sector is being assessed.