Call for comments on a draft assessment memorandum for national road transport emissions trading

An interdepartmental working group of public servants convened at the Ministry of Transport and Communications has prepared a draft assessment memorandum concerning implementation of a national road transport emissions trading scheme. The Ministry has now circulated this draft for comments. The call for comments expires on 3 December 2021.

The work is part of preparing a roadmap for fossil-free transport. The measures of this roadmap concern road transport, which accounts for most transport emissions. The three-phase plan seeks to halve transport emissions from 2005 levels by the year 2030. The preparations of the public servant working group concern the third, conditional phase of the roadmap. Emissions trading could be included in the third phase if a combination of the measures of the first two phases and decisions at EU level prove insufficient. The assessment memorandum is an investigation of the features and impacts of the emissions trading scheme.

The call for comments is particularly keen to hear views on the appropriateness of the national model, on impact assessments, and on possible compensation models.

The European Commission published its Fit for 55 package of legislative proposals on climate action on 14 July 2021. The working group has considered this Commission initiative, which includes a proposal for an EU-wide emissions trading scheme for road transport and separate heating of buildings beginning in 2026. National emissions trading for road transport will be an option if no corresponding EU-wide scheme is implemented. A scaled-down national emissions trading scheme could also be considered during the transition period if necessary.

The preparations for national road transport emissions trading have increased the knowledge base and assisted in evaluating the appropriateness of the Commission proposal and the need for impact assessments. The working group consulted stakeholders during its preparatory work.

What is emissions trading?

An emissions trading scheme for road transport would create a market for CO2 emissions derived from fuels used in road transport.

Road transport emissions trading requires fuel distributors to purchase emission rights (allowances). The amount of required emission reductions affects the price of these rights.

The advantage of emissions trading over other regulatory instruments is that it ensures that the emissions target is reached, as the quantity of emission rights offered for sale can be set to match the emissions cap.

There is currently no need to introduce national road transport emissions trading

The national system outlined in the assessment memorandum and the EU-level system proposed by the European Commission are very similar.

The advantage of a national system compared to EU emissions trading would lie in achieving national emission reduction targets specifically in the road transport sector. The timetable would also be nationally negotiable.

One important advantage of EU-wide emissions trading is that this would guide emission reductions throughout the territory of the European Union. The same EU-wide price impact would not erode the relative competitiveness of Finnish businesses compared to enterprises in the rest of the European Union.

Emissions from road transport are projected to decline more rapidly than expected. The forecast of emission reductions according to the baseline forecast for road transport updated in summer 2021 suggests that there will be no need to require any immediate introduction of national road transport emissions trading if national and EU-level measures are implemented as planned.

National measures must also allow for the possibility that EU emissions trading will be delayed or not implemented at all.

What's next?

Opinions on the assessment memorandum may be submitted at www.lausuntopalvelu.fi. All organisations and individuals may submit opinions. The call for comments expires on 3 December 2021.

Public servants will continue preparations after the consultation round closes.

The term of the working group preparing national emissions trading ends on 31 December 2021.

Inquiries:

Matleena Kurki-Suutarinen, Working group chair, Senior Government Adviser, and

Valtteri Härmälä, Senior Specialist

Interview requests should be addressed to Communications Director Susanna Niinivaara, tel.+358 40 081 6187, [email protected]