Lithuania supports EU Emissions Trading System Market Stability Reserve

“Such reserve would strengthen this trading system as the prices for emission allowances would more or less depend on market impacts,” says Minister of Environment Kęstutis Trečiokas.

Lithuania supports the EC proposal that the reserve would start operating in 2021 rather than in 2017, as proposed by some EU member-states. According to the minister, in Lithuania, the current prices for fuel and electricity are among highest in the Community, the industry still uses outdated industrial technologies on a wide scale; therefore, it cannot meet the pollution indicators which serve as the basis for estimating the quantities of emission allowances allocated to economic entities free of charge. In order for the industry to be able to accumulate investments and modernise production, it is important that we avoid a sudden rise in the price of emission allowances, as Minister Trečiokas stated.

The market stability reserve would help resolve the current ETS (emissions trading system) problems. As a result of the economic crisis and reduced market demand, there is a surplus of more than two billions of emission allowances. Therefore, the prices of emission allowances are too low and the incentives for economic entities to invest in measures aimed at reducing greenhouse gas emissions have weakened. Based on the calculations carried out by the European Commission and EU member-states, the EU ETS is inefficient. It must be improved because the expenses related to the fight against climate change will inevitably increase as the EU seeks to implement much stricter goals to reduce greenhouse gas emissions, Lithuania’s Ministry of Environment says.