Letter to ETS Rapporteurs: Establishment of the Just Transition Fund and end of coal subsidies (art. 10c)

Financing the transition

Dear Rapporteur/Shadow Rapporteur,

As the ETS revision process closes to an end, we would like to bring to your attention to important differences between the decision of the European Parliament and the “general approach” agreed between the Environment Ministers in terms of EU ETS Funds. The eligibility criteria for investments under an article 10c derogation and the establishment of a Just Transition Fund. Both issues concern lower income Member States and are crucial for their alignment with EU’s ambitious decarbonization objectives.

Article 10c was created as a transitional mechanism to support low income Member States in their efforts to shift their energy mix towards cleaner technologies. Continuing to allow this mechanism to subsidize coal infrastructure would be in clear contradiction of the spirit of the exemption, since it will decisively contribute to the lock-in of the energy mix in fossil fuels in those Member States which require the greatest efforts in the EU, to achieve the exact opposite goal of decarbonizing their economies.

Therefore we very much welcomed that the European Parliament, voted to exclude coal from eligible investments under both art. 10c and 10d according to amendments 94 and 104, respectively. Although the Council of Environment Ministers adopted a similar position for the Modernization Fund in the “general approach” text, unfortunately it failed to extend the exclusion of investments in coal from article 10c eligibility criteria.

We therefore urge you to support stricter eligibility criteria for 10c as part of the ongoing trilogue negotiations, in line with the mandate given to you by EP’s vote on 15th of February 2017.

On the contrary, instead of funding coal infrastructure in low income Member States, ETS should support the local communities, local economies, workers and their families in mining regions, through the establishment of a Just Transition Fund.

Again the European Parliament seems to grasp reality much better than the Council of Environment Ministers as it voted in favor of a Just Transition Fund “to support regions which combine a high share of workers in carbon-dependent sectors and a GDP per capita well below the Union average”, Regrettably, this amendment was not included in the “general approach” discussed amongst Environment Ministers on February the 28th.

However, the formation of a Just Transition Fund as part of the ETS revision can significantly contribute towards providing a safety net for the affected workers and their families, as well as supporting the development of additional economic activities in these regions, which will in turn provide employment opportunities and sustain the local economy in coming years.

This fund will be particularly useful for low income Member States, where the implementation of ambitious climate policies should not come at the expense of social justice. We therefore urge you to support the establishment of this funding mechanism in the ongoing trilogue negotiations, in line with the mandate given to you by EP’s vote on 15th of February 2017.

Yours sincerely,

Nikos Mantzaris, Head of Climate & Energy Policy Department, WWF Greece
Joanna Flisowska, Coal Policy Coordinator, Climate Action Network Europe



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