EU Emissions Trading Vote: Massive New Handouts To Polluters For Another Decade

17th February 2017 / EU
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By CorporateEuropeObservatoryThe European Parliament is voting on the reform of the EU Emissions Trading System (ETS) this week which is likely to result in massive new handouts to polluters for another decade.

 

There’s nothing very romantic about EU climate policy – even if some environmental groups have been trailing the European Parliament’s vote on the reform of the emissions trading system (EU ETS) as an occasion for “climate love”. It would be better just to accept a hard truth: it’s not working. The ETS has been flirting with big polluters since the start. It has awarded billions in subsidies to some of the EU’s dirtiest industries. And the proposals before the EU Parliament, which extend the scheme from 2021 to 2030, mean a decade more of cheating on our climate obligations.

 

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So what’s actually at stake when Parliament votes on ETS reform? The key controversies focus on amendments introduced by the European Peoples’ Party (EPP), the centre-right grouping that is the largest in Parliament, aimed at reversing elements a “compromise” package agreed by the Parliament’s environment committee (ENVI) in December 2016.

The first of the European Peoples’ Party amendments wants to reduce the “linear reduction factor” – the annual emissions cuts expected from industries covered by emissions trading – from 2.4 per cent to 2.2 per cent. Although the latter figure was originally proposed by the European Commission, it has been criticised for falling short of the levels that would be needed to achieve a minimum target of 80 per cent greenhouse gas emissions reductions (compared to 1990 levels) put forward in the 2050 Low-Carbon Roadmap. The 2.4 per cent proposal is an obvious improvement, but it should be recalled that this is still going to leave the EU a long way short of meeting its fair share of global climate action.

Graph showing number of polluter handouts from the EUETS

 

The EPP is also pushing for the re-inclusion of the cement sector in the long list of industries that would receive free pollution permits, which are worth billions of euros and help big polluters avoid having to clean up their act. Cement was never really exposed to international competition (the supposed basis for handing out free pollution permits), but back in 2010-2011 lobbyists for the industry successfully secured free permits anyway. The ENVI Committee proposed replacing this with an “import inclusion scheme” that would require cement importers to buy pollution permits for their imports (or impose an equivalent tariff). The EPP is opposed to this – it wants to continue giving free permits to the whole cement sector. To add insult to injury, they’ve also suggested an amendment that would mean more free permits overall, to avoid any risk that cement would end up reducing the number of free permits given to other industries.

The amendments on cement are particularly outrageous, given that the EU cement industry lags behind most of the world (including India, China and Brazil) in terms of its commitment to reducing emissions. There’s a fear, too, that the argument over cement could unpick the work of the ENVI Committee, with the Parliament voting down the package of emissions trading reform alltogether.

But it’s important not to lose sight of the bigger picture: irrespective of which way the votes on individual amendments go, the Parliament is voting on a package that would offer massive new handouts to polluters for another decade. Even if the EPP and other polluter-friendly amendments are defeated, the proposal by the ENVI Committee suggests handouts of free permits, and various funds (with limited oversight) that could hand big polluters around €198 billion between 2021 and 2030. And there’s nothing to love about that.

 

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