Second chance thrown away! European Parliament fails at delivering ambitious ETS reform

Posted on June, 22 2022

Today the European Parliament gave up on its climate ambitions by voting for a diluted reform of the EU’s Emission Trading System (ETS). This comes two weeks after MEPs rejected the first proposal and it is a missed opportunity to increase the system’s overall targets.

The agreed proposal is no more than old wine in new bottles as it fails to reintroduce the critical elements that had been lost in the first vote following intensive industry lobbying. 

Instead of voting through measures that would reduce ETS emissions by 70% - in line with climate science -, or the 68% proposed by the Environment Committee, MEPs in plenary settled for a feeble 64%. With such weak commitments, the EP has effectively abandoned its own climate goals. In this context the agreed positions on the Carbon Border Adjustment Mechanism (CBAM) and the Social Climate Fund are all too little, too late. 

“This is a disappointing outcome from a body which claims to be a climate leader. MEPs have failed the climate and they’ve failed EU citizens by not maintaining what was agreed in the Environment Committee. By caving in to polluters’ desperate attempts to slow down climate action, they are complicit in eroding the EU’s most powerful instrument to drive industrial decarbonisation: the ETS. The outcome is also totally inconsistent with the Parliament’s previous call for an overall 60% EU emissions reduction target for 2030,” said Camille Maury, Industrial Decarbonisation Policy Officer, WWF European Policy Office.

To make things even worse. MEPs gave up on implementing the timely phase-out of free permits to pollute for CBAM sectors. The earlier end of free ETS allowances (2032 rather than 2034 as voted in last plenary) is just playing with numbers that does not reflect the severity of the climate crisis, as polluting industries will continue to receive half of their free allowances in 2030 while CBAM will already be in place. This will hinder industrial decarbonisation and come at a huge cost to citizens and climate action.

“The introduction of an early CBAM could have been an effective climate policy - but this cannot work if polluting industries continue to receive freebies for many years to come! MEPs have failed to stand up to industry by voting for the ENVI deal and walking the talk on their declared climate ambition. But despite their lobbying wins the industry shouldn’t have any illusions: Freebies to pollute will come to an end eventually, so the best time to invest in decarbonisation is now!“ concluded Camille Maury.

A Social Climate Fund dead on arrival

In its vote on the Social Climate Fund - a fund to support European citizens should climate measures lead to higher bills or other unfair impacts -, the Parliament failed to secure a strong fund. In what looks to become an empty box, MEPs settled for a weakened proposal on several fronts.

“By leaving the door open to fossil fuels, revenues from a carbon price could be used to lock citizens into expensive, volatile energy for longer. Further, allowing member states to access the money even without a national carbon neutrality commitment is a bad idea. In conclusion it’s also disappointing that MEPs have reduced the budget of this crucial fund,” said Katie Treadwell, Energy Policy Officer, WWF European Policy Office.

As the European Parliament failed to demonstrate climate leadership it is now up to the Council and Member States on June 28 to raise ambitions in order for the EU to stick to its own climate goals and those of the 1.5°C Paris Agreement.

Coal-fired power plant, North-Rhine Westphalia, Germany.
© Andrew Kerr / WWF