“No deal is better than a bad deal” - European Parliament rejects weak position on the EU Emissions Trading System

Posted on June, 08 2022

In a highly unusual move, the European Parliament’s plenary today rejected its report on the reform of the EU’s Emissions Trading System (ETS), after many critical elements of the text presented by the Parliament’s Environment Committee had been voted down during a one-hour voting session. Among others, this concerned the overall ambition of the ETS, as well as the deadline for phasing out free pollution allowances to industry.

“MEPs pulled the plug after critical elements agreed by the Environment Committee had been lost during the plenary vote following relentless industry lobbying. It’s now back to the drawing board to bring about a viable majority for an effective ETS with strong overall ambition and a timely phase out of free pollution allowances - and quickly. Our climate cannot wait!” said Camille Maury, Policy Officer at the WWF European Policy Office.

The text has now been referred back to the Environment Committee to negotiate new compromises before another plenary vote.

WWF is calling on MEPs to work on strengthening the text again before a final vote, in particular on:

Overall ambition: The ENVI text would have translated into almost 68% emission reductions compared to 2005, but this was rejected in plenary, which instead adopted a 64% target. WWF had called for a target of 70% in line with the Paris climate goals, but the original Commission proposal was a meagre 61%.
Phase-out of free ETS allowances: The ENVI deal on an earlier phase out of free allowances was also rejected during plenary, which instead adopted an amendment for a phase-out of free allocations for the sectors covered by the Carbon Border Adjustment Mechanism (CBAM) only by 2034. WWF had called for a stop of freebies to polluting industries by 2030 for CBAM sectors.
Conditionality of free allowances: The ENVI report had introduced strong conditionalities, stipulating that polluters must demonstrate plans to reach climate neutrality and implement the right energy efficiency measures in order to obtain free allowances. This ENVI amendment was adopted in plenary, and WWF is calling on MEPs to maintain this text to ensure fair and robust conditionality for free allowances.

The rejection of the ETS report also had implications for the other files, notably the Social Climate Fund (SCF) and CBAM, the votes on which were also postponed to a later stage as these reports form a package which must remain coherent.

The European Council is scheduled to finalise its general approach by the end of June.

It’s now back to the drawing board to bring about a viable majority for an effective ETS with strong overall ambition and a timely phase out of free pollution allowances - and quickly. Our climate cannot wait!

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