Pushing for a climate-smart EU
The framework for the EU’s new 2030 climate and energy package is being designed. WWF asks the EU and its Member States to create a framework that is compatible with a climate safe future, where global warming is stabilised at 1.5°C above pre-industrial levels. Such a scenario is attainable, with a strong governance network for energy efficiency and emissions reductions, nationally binding renewables targets and by strengthening the EU’s 2020 targets.
EU Emissions Trading System (EU ETS)
In addition to this, the EU will need to adjust its policies and measures – starting with the EU Emissions Trading System (ETS), which is currently failing completely as a means of decreasing European industrial emissions.
The EU describes the ETS as the cornerstone of the EU’s efforts to reduce industrial greenhouse gas emissions, by putting a price on carbon pollution from large industrial installations. The system however is flawed and ‘functions’ under the auspices of weak regulation. The current carbon price signal (around €7 a tonne of CO2), is nowhere near high enough to provide industry with the incentive to switch to renewable energy and energy saving technologies. Low carbon prices, paired with an oversupply of allowances to the market, means that the EU risks locking in high-carbon infrastructure, and slowing down cleaner investments, and progress towards a green and resource-efficient economy.
In theory the ETS is a useful framework, but in reality it fails to deliver its aim to reduce carbon pollution in a cost-effective manner. Both short and long term measures are needed to rescue the EU ETS from redundancy. Notably, the excessive issuance of free pollution permits to energy intensive industries should be severely restricted by using realistic assumptions of competitiveness impacts based on factual data.
The future will tell if the EU ETS can become more than the paper tiger it currently is. The recently agreed ETS Market Stability Reserve will function as a purgatory for the surplus of credits on the market and ultimately needs to serve to get rid permanently of the billions of tonnes of excess pollution permits sloshing around. Finally, carbon pricing in the EU has great potential to contribute financially to further climate policies both domestically and internationally. The time is ripe for large- scale smart earmarking of ETS auctioning revenues in order to create a virtuous cycle where pollution pricing actively funds additional emission reductions. This would actively mainstream climate policy into industrial and development policy to build a cleaner, more innovative and fairer future for all.
Emissions Performance Standard (EPS)
WWF supports the ETS reforms, but this will not be enough to steer Europe away from investments in high-emitting infrastructure in a timely manner. Additional measures should be adopted by the EU.
One such way to enhance the effectiveness of the EU’s current legislation, and the ETS, is the introduction of an Emissions Performance Standard (EPS). The notion of an EPS for the ETS was raised in the policy recommendations of the Final Report from the CCS Directive Public Consultation Evaluation - Support to the review of Directive 2009/31/EC on the geological storage of carbon dioxide , presented to the European Commission. To date, only the European Investment Bank has put in place an EPS of 550gCO2/kWh on projects it will fund.
WWF strongly believes that the EU needs an EPS for CO2 from power plants, in order to prevent Europe’s most-polluting infrastructure from becoming a long term part of Europe’s landscape. There is a clear need to include no-nonsense policies like an emissions performance standard to prevent locking in emissions from the worst polluters. The use of an EPS will act as a strong accompaniment to the ETS, by providing a clear investment signal for the decarbonisation of the power sector.
The EU must achieve adequate and cost-effective industrial greenhouse gas pollution reductions, embedded in a healthy mix of complementary policy instruments.
 CCS Directive Evaluation - Final Report, 2015
Sam Van Den Plas
Policy Officer, Climate & Energy
WWF European Policy Office,
+32 2 740 09 32