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CAN Europe: EU puts industry protection over people and planet

Dec 18, 2022 , ,

Brussels, 18 December 2022

  • Emissions Trading System’s agreement raises climate ambition, but is still not in line with the 1.5°C goal and the 70% emissions reduction needed

  • Free pollution permits to industry will only be phased out fully by 2034, leaving big polluters continue to receive billions of allowances without paying for their emissions

  • On a positive side, lawmakers agreed to earmark ETS revenue, making it compulsory for Member States to dedicate all their auctioning revenues to climate action investments 

The EU missed a critical chance to significantly ramp up its climate ambition in one of its key enablers: the EU carbon market. EU negotiators clinched a disappointing deal on the revision of the ETS – Emissions Trading System, this night. The deal fails to deliver on the EU’s fair share to the 1.5 Paris Agreement target and  heavily favours the protection of the polluting industry over the people.

Negotiators did not truly go beyond the level of ambition proposed by the European Commission and settled on 62% emission cuts for the ETS sectors by 2030, clearly missing a vital chance to strengthen the EU carbon market and boosting the EU’s 2030 emission reduction target. This is far below the 70% emission cuts needed under ETS to deliver on the EU’s fair share contribution to efforts limiting global warming to 1.5°C as foreseen under the Paris Agreement. With its massive historic responsibility for the current climate emergency and its capacity to act as a strong industrialised economy, the European Union needs to do more than the global average to reduce emissions.

“Only weeks after COP27 rang the alarm bells that the 1.5°C target is on life support, EU lawmakers missed an important and obvious opportunity to get the EU on track. What they agreed last night fails to put the ETS in line with the Paris Agreement objective and hence does not represent a fair contribution to fighting dangerous climate change”, said Klaus Röhrig, Head of Climate in CAN Europe.

Also in the context of the ongoing Russian war against Ukraine, much stronger climate policy, in combination with solid support for vulnerable households, is essential for Europe to wean itself off of fossil fuels which lie at the heart of the current price crisis and the climate emergency. Yet, the EU legislators decided today to continue feeding under-performing industry with free pollution permits instead of steering the wheel in a fairer direction and ensure support for the transition of low-income households towards energy efficiency and 100% renewables.

“Lawmakers clearly put protection of industry over that of people and planet. Big polluters go home with pockets full of free money while people in comparison receive breadcrumbs to go through yet another fossil winter”, added Klaus Röhrig.

On a positive note, negotiators tightened the rules under which EU governments need to spend the immense amount of revenue generated by the auctioning of ETS allowances, making it obligatory for Member States to funnel 100% of their auctioning income to climate action.

A heavy blow however was dealt to the Modernisation Fund, which provides around EUR 60 billion to lower income Member States to modernise their energy systems at home. The Council  pushed strongly for opening even more doors to fossil gas-based investments within the Fund. The European Parliament gave in, giving a green light to beneficiary Member States for wasting at least EUR 4.8 billion of EU money for investments into fossil gas energy production, thereby risking gas-lock-in and stranded assets, instead of steering every single cent for future-proof solutions: energy efficiency, modernisation of energy networks and 100% renewables.

Other quotes from NGOs in this document.

Background

The informal agreement reached last night in trilogue still needs to be officially approved before entering into force, usually a mere formality. After the Carbon Border Adjustment Mechanism (CBAM) was approved earlier this week, and the recent agreements on the Effort Sharing Regulation (ESR) and on Land Use (LULUCF), the conclusion of the ETS marks the end of the negotiation of the climate part of the ‘Fit For 55’ package. Major energy-related parts of the package, however, still need to be finalised in the new year.

The Emissions Trading System legislative file is a key part of the EU’s ‘Fit for 55’ package that targets to cut net greenhouse gases (GHG) emissions by 55% by 2030 and an important milestone of the European Green Deal objective to make the bloc climate neutral by 2050.

Science shows us that it is possible for the EU to achieve at least 65% emission cuts by 2030 and climate neutrality by 2040, which is in line with the Paris Agreement goal.

This press release is available here.

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