Emission trading best choice for EU economy and to ensure Kyoto compliance | WWF

Emission trading best choice for EU economy and to ensure Kyoto compliance

Posted on 07 June 2006
Emissions of greenhouse gas from EU countries might soon be reduced drastically

Brussels, Belgium – The European Emission Trading Scheme (EU ETS) will not be responsible for major job losses or for a reduction of EU competitiveness, says a new report commissioned by WWF. Compared to other policy instruments to achieve Kyoto compliance, the EU ETS – Europe’s key instrument to tackle climate change – is the cheapest option and can have positive effects on competitiveness.

WWF, the global conservation organization, commissioned the Centre for European Economic Research (ZEW, Germany) to analyse all scientific studies and models available on ETS impacts on competitiveness and employment. The analysis shows that dire warnings about devastating ETS impacts as expressed by companies and industry associations from various sectors lack justification.

“Most industry propaganda about negative ETS impacts is scaremongering, based on misconception and misinformation," said Stephan Singer, Head of WWF’s European Climate and Energy Policy Unit.

“Industries like steel, chemicals and coal keep crying wolf and paint an economic doomsday scenario. But we know that a sound cap and trade regime won’t harm Europe’s competitiveness.”

Given the EU’s legal obligation under the Kyoto Protocol, a “do nothing” alternative is not an option. The report shows that emission trading is the most cost-effective regulation method in comparison with other policy instruments, such as an eco-tax. If countries were required to reach their Kyoto targets without the flexibility to engage in any emission trading, this would result in a substantial increase in costs.

With regard to ETS impacts on employment, the report suggests that aggregated job losses will barely be visible, even compared to scenarios without EU regulation to reduce emissions. If economic ETS impacts are compared to impacts of other policy instruments to reach Kyoto targets, ZEW rates the EU ETS among the best choices.

“At worst, ETS impacts on employment and competitiveness are modest but smaller than impacts of alternative regulation to stop climate pollution,” added Singer. “Now we must focus on stronger caps and structural changes to improve the overall efficiency of the scheme. In principle, a cap and trade system like the EU ETS is the most economic tool we have to achieve deep cuts in CO2 in the industrial sector.”

In tapping its huge innovation potential, WWF believes that the EU ETS can have two positive effects at relatively low cost: significant contributions to CO2 reductions and structural change in various sectors to make Europe ready for a low carbon future.

For further information:
Stephan Singer, Head of European Climate and Energy Policy Unit
WWF European Policy Office
Tel: +32 2 743 88 17
E-mail: ssinger@wwfepo.org

Christian Teriete, Communications Coordinator
WWF PowerSwitch! Campaign
Tel: +49 162 29 144 29
E-mail: teriete@wwf.de