ETS revision crucial for a climate deal

Climate action

Without substantial reform of its Emissions Trading System, Europe cannot seriously claim a leadership role at the international negotiations in and after Paris, writes Anja Kollmuss of Climate Action Network Europe.

This Op-Ed was published in EurActiv on 26.11.2015

Anja Kollmuss is the climate policy coordinator of Climate Action Network Europe

The EU portrays itself as a leader at the upcoming climate negotiations in Paris. But can the EU really be a model for the rest of the world given its limited ambition and the failure of its flagship policy instrument, the Emissions Trading System, to drive decarbonsation?

The EU is pushing for a five year review cycle in the upcoming Paris agreement. Such a ratcheting-up mechanism is absolutely vital, since the current pledges from countries are woefully insufficient and will still lead to three degrees of global warming or more. The EU’s leadership on this issue is therefore very welcome. But for it to be credible Europe’s promises have to be translated into real action at home. 

If the EU wants to successfully push for a five year review cycle in Paris, it cannot accept a ten year period for its own Emissions Trading System without such a review. Europe has to ensure its own target is open for review and strengthened every five years.

Equally important is strong climate action before 2020. Years ahead, the EU has already met its own 2020 climate target of reducing emissions by 20%. Instead of raising its target to build momentum ensuring cost-effective and fair climate action, the EU plans to lean back.

By 2020, the surplus will likely have grown to three or even four billion pollution permits. Current rules and the Commission’s ETS reform proposal allow the whole surplus to simply be carried over and be used to meet the EU’s 2030 target. Industry can accumulate surplus emissions permits and then use them to meet their 2030 target. It is now in the hands of European policymakers to change this.

One of the crucial sticking points in Paris will be that rich nations have to prove to poorer ones that they are serious about climate action, not in the future but now. The EU could make a substantial contribution to closing the very large global emissions gap that exists between planned reductions and reductions needed to prevent dangerous warming. This would not require the EU to make an additional effort, as the reductions are already happening.

It would simply mean cancelling the surplus ETS allowances to contribute to further pre-2020 action instead of carrying them over and weakening the EU’s post-2020 action. A new Paris climate deal would not start until 2021. Cancelling its ETS surplus would send a clear signal to the world that the EU is serious about its pre-2020 ambition.

CAN Europe is calling on European leaders to put their words into action. To be a climate leader, the EU must radically and quickly raise its ambition by permanently cancelling surplus pollution permits and by increasing its target every five years. Failure to effectively reform the ETS will compromise the EU’s ability to be a global leader on climate issues and diminish its influence in international climate negotiations.