ETS reform: polluters could get €165 bn, undermining Paris Agreement
- EU trilogue negotiations on 12 October could lead to deal on Emissions Trading System reform for 2021-2030, after more than two years of negotiations
- Carbon price signal has been too low for years due to surplus emissions allowances, despite repeated calls for reform from campaigners, industry and decision-makers
- ETS free allowances would represent a pollution subsidy to heavy industry of more than €165 billion from 2021 to 2030 - ten times more than what would support clean innovation in that time
“The upcoming ETS reform deal will show the world where Europe’s priorities lie. Two years after the Paris Agreement, we are on the brink of letting taxpayers fund polluting industry via free allowances and exemptions to the tune of almost € 500 billion up to 2030! Instead, we should use public resources to fund what the public supports. That is, energy savings, renewable energies and clean industrial innovation.
“We have the Paris Agreement behind us, and a series of climate laws to be finalised ahead of us. So, will EU decision-makers join the dots, and help our carbon market finally cut emissions in line with our international commitments?” added Van den plas.
WWF is calling on EU lawmakers to:
- Align the EU ETS with the Paris Agreement’s goal of keeping global warming to well below 2 degrees and working to keep it below 1.5 degrees. In order to achieve this, Europe needs to tackle the vast surplus of ETS emission allowances which undermine future emission reduction efforts.
- Minimise free allocation of emission allowances. These free allowances represent lost auctioning revenues - which could have been spent on climate action. Taxpayers are providing an unjustifiable subsidy to Europe’s largest polluters in the shape of free pollution permits.
- Exclude coal investments from the ETS funding mechanisms. WWF supports the European Parliament's proposal regarding a 450gCO2/kWh emission performance standard (that would rule out coal investments from these funds), to increase the overall amount of funding and establish a Just Transition Fund. Increasing funding while not excluding coal investments is unacceptable.
The reform of the European Emission Trading System (EU ETS) for the period 2021-2030 is reaching its final stage in the trialogue negotiations between the European Parliament, European Council and European Commission. A final agreement could well be reached on Thursday 12 October. This is the first major EU climate law to be updated and agreed for the period after 2020 as part of the 2030 climate and energy package and Europe’s implementation of the Paris Agreement. The EU ETS is one of Europe’s key instrument to meeting its commitments under the Paris Climate Agreement, covering 40% of EU greenhouse gas emissions.
Senior Communications Officer
WWF European Policy Office
+32 473 573 317