Environment ministers must breathe life into ailing EU carbon market
Posted on 17 June 2016
EU ministers can make the ETS into a meaningful and effective climate instrument which helps keep temperature rise well under 2°C and work towards 1.5°C, as agreed internationally in Paris, before it’s too late.
What? Environment ministers will debate the European Commission’s proposal for EU Emission Trading System (ETS) reform on Monday 20 June. They will discuss how to ensure the future ETS is in line with goals of the Paris climate agreement, which was reached after the reform proposal was presented.
The EU ETS has so far failed to do what it was set up to do: it has not led to adequate greenhouse gas emission reductions nor put a meaningful price on pollution.
This is because there are too many pollution permits - known as ‘emissions allowances’ - on the market, so their price has remained low. Therefore there has been little incentive to cut emissions. Moreover, vast amounts of free emissions allowances have been handed out to energy-intensive sectors, undermining the very principle the EU ETS was set up to enact.
The European Commission’s reform proposal does not go far enough in addressing the underlying problems to make the ETS relevant again.
“We have already missed ten years of opportunities to curb emissions and invest in a clean, competitive economy while the weak ETS continued to underperform, and the current proposals are setting Europe’s carbon market up for another decade of failure.”, said Imke Lübbeke, Head of EU Climate and Energy Policy at WWF European Policy Office.
“But EU ministers have a chance to turn the tide. They can make the ETS into a meaningful and effective climate instrument which helps keep temperature rise well under 2°C and work towards 1.5°C, as agreed internationally in Paris, before it’s too late.
To get there, more pollution permits need to come permanently off the market, free permits must be phased out, and all should instead be auctioned to fund renewables and energy efficiency. Member States which cut emissions more rapidly must be able to remove excess permits from the market,” said Lübbeke.
Council and Parliament will continue their consideration of the proposal this year.