ETS credibility at stake as industrial polluters profit yet again
Brussels, Belgium - Tomorrow, the European Commission and EU member states will decide on key measures to improve the functioning of the EU Emissions Trading System (ETS) in the next trading period, post 2012. A new WWF report shows that, if not improved, one of the world’s most important mechanisms to tackle climate change risks being undermined by short-sighted plans that allow companies to avoid paying for the greenhouse gas pollution they cause, and to use fake carbon offsets.
New research conducted in Germany by the Öko-Institut on behalf of WWF, shows that ETS loopholes, including free pollution permits and overseas offsets, turn the system into a very profitable business for thirteen of Europe’s biggest polluters. German power companies have made windfall profits that amount to €39 billion and several energy-intensive German companies, such as steel producers ThyssenKrupp and Salzgitter, will profit from hundreds of millions Euros through the sale of surplus emission allowances.
The EU member states will agree tomorrow on benchmarks to decide how many free carbon allowances energy-intensive sectors will get, and will discuss the Commission’s proposal to limit the use of carbon credits from HFC-23 and nitrous oxide (N2O) emissions from adipic acid destruction projects within the EU ETS as of 1 January 2013. These decisions are of key importance to strengthen the ETS system and create a robust and effective tool to reduce carbon emissions.
“Polluting companies who have been making huge profits through the ETS are fighting to keep its loopholes open. The EU should not bend the rules to the wishes of energy intensive industries but should instead stop handing out free pollution permits and provide real incentives for structural decarbonisation.” says Jason Anderson, Head of European Climate and Energy Policy at WWF.
The research also finds that German industries are buying massive amounts of credits from projects outside the EU (under the Kyoto Protocol’s Clean Development Mechanism, or CDM). In Germany more than 50% of the emission reductions can be realised outside of the EU by 2020. It has been possible for the companies considered to reap extensive additional profits by selling off their freely allocated allowances at market prices and substituting them for cheaper CDM credits.
“WWF has serious concerns about the validity of many of these overseas projects, but even more worrying is the current gaming to maximise profits at the expense of real carbon emission reductions within Europe. WWF urges the EU to put a halt to the use of fake offsets, and we call upon Member States to support the current proposal by the Commission to ban credits from industrial gas projects within the EU ETS." Anderson adds.
"The ETS is once again at a crossroads. It can either become a robust and effective way of reducing carbon emissions, or it can become a messy and deeply flawed market for a virtual commodity that only really benefits a handful of powerful companies. Climate change is an urgent priority, and we can’t afford to waste any more time before we get Europe’s emissions on a downward path,” Anderson concludes.
• Sam Van den plas, Climate and Energy Policy Officer, WWF European Policy Office, Tel. +32 2 740 09 28, mob +32 (0)485 95 22 01, email: SVandenplas@wwfepo.org
• Stefania Campogianni, Media and Communications Officer, WWF European Policy Office, Tel.+32 2 743 88 15, mob. +32 (0)499 539 736 email@example.com