ETS vote: Free pollution permits harm the climate

Posted on 19 April 2022

94% of emissions from these sectors will be covered by free allowances up to 2030 if nothing changes.
What’s happening?
On 20 April, the European Parliament’s energy and industry committee (ITRE) will vote on its Emissions Trading System report. It is jointly responsible with the Parliament’s environment committee on one key issue: free emissions allowances. 

Why does this matter?
The EU has a 2050 climate neutrality target. In order to meet it, resources and energy-intensive industries like cement, steel and chemicals, which produce 15% of EU greenhouse gas emissions, must decarbonise. 

However, their emissions levels have barely budged since 2013.

This is mainly because those industries receive free emissions allowances under the EU Emissions Trading System. This means that while other ETS sectors, like power, have had to pay to emit carbon, these resources and energy-intensive industries have not.  


Now, with the revision of the ETS, it is critical for free allowances to be phased out  so that industry is finally pushed towards decarbonising. 

Ending freebies will generate substantial additional auctioning revenues for Member States. These should be invested in energy efficiency, innovation and a socially just transformation. Auctioned allowances would support industrial decarbonisation much more efficiently than ill-targeted free allowances have done. 

Camille Maury, Policy Officer at WWF European Policy Office said:
“While other sectors are now having to do their bit for the climate, these industries are stuck in a polluting time warp. And if nothing changes, a whopping 94% of their carbon emissions will still be covered by free allowances up to 2030. It’s time for the EU to take this crazy out-dated system in hand and ensure that all polluters must pay, and that ETS allowances are used to finance the green transition.”

What else is WWF calling for?
With 16 other NGOs, WWF has sent a letter to ITRE MEPs ahead of the vote.

The signatories are calling for free allocation of ETS allowances to be phased out as soon as possible; for auctioning revenues from these allowances to support the green transition and address investment gaps; for the carbon border adjustment mechanism (a levy on imports from certain industries) to replace free allowances not be additional to them, and for carbon pricing to be complemented by an industrial regulatory framework that incentivises circular solutions and attracts the investments for clean production techniques. 

What’s next?
The EU Parliament’s Environment Committee will vote on the ETS revision proposal, including on free allowances, on 16-17 May, with a plenary vote expected in June. 

Contact:
Sarah Azau
Communications and media manager
WWF European Policy Office
sazau@wwf.eu 
Tel:+32 473 57 31 37
The carbon emissions levels of energy-intensive industries have barely fallen since 2013.
© Sam Hobson / WWF-UK