MEPs support socially just carbon price for transport and households, but fail to exclude fossil fuels

Posted on 18 May 2022

MEPs in the European Parliament’s Environment Committee have agreed on a socially acceptable way of introducing an Emissions Trading System for the buildings and transport sector (ETS2), which contains important additional measures to ensure that households will be supported in the transition and the price will not exceed unacceptable levels.

 This is thanks to safeguards including a large and transformative Social Climate Fund and a requirement to spend all ETS 2 revenues on social climate action.

 

Carbon pricing can play a role to reach the necessary emission reductions in transport and buildings, but it is critical for this to be embedded in a range of policies, including a transformative Social Climate Fund, public investments, and high regulatory ambition.

 

“MEPs have boosted the inclusivity of the Social Climate Fund, putting the power to decide on a socially fair emissions reduction pathway in the hands of the people and communities most affected by climate action and climate change. It’s concerning however that the budget has been reduced even from the Commission's proposal, undermining the fund’s potential impact,” said Katie Treadwell, Senior Energy Policy Officer at the WWF European Policy Office.

 

The idea of adding a limit to the price for consumers was conceived for a situation in which the ETS2 is applied to households; this will now not be the case until 2028. The compromise adopted by MEPs - which foresees the inclusion of a fixed price ceiling, despite the limited application of the ETS2 to commercial operators only until 2028 - will lead to a gap in emission reductions the tool can deliver. It likewise fails to place the responsibility for supporting their citizens on national governments, by allowing access to the fund even if a member state has not committed to a national climate neutrality target.

 

“It is important to protect vulnerable citizens from an unfair burden, particularly in the midst of this energy crisis. But the deal struck today leaves a gap in the investment support households can expect to receive, and therefore a gap in emission reductions of buildings and transport. This needs to be filled with other measures, including massive public investments in heat pumps, district heating and deep renovations,” said Jonathan Packroff, Climate and Energy Policy Assistant at the WWF European Policy Office

 

WWF also opposes any use of ETS 2 revenues to support new investments in fossil fuels, which would undermine the objectives of the Social Climate Fund, but also the condition that all ETS revenue should contribute to emissions reductions.

 

“Weaning the EU off fossil fuels is also a social goal, and MEPs clearly recognise this. Unfortunately, they have failed to exclude fossil fuels explicitly, meaning the Social Climate Fund could actually lock households into paying a carbon price for longer. The co-legislators must make sure fossil fuels are kicked out without a doubt before they finalise this Regulation,” concludes Katie Treadwell.

 
European Parliament, Brussels
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