EU carbon market future in doubt as lawmakers fail with reform

STRASBOURG 15 February 2017. Today the European Parliament adopted its position on the revision of the EU’s Emissions Trading System (EU ETS) for the 2021-2030 period. Regrettably, the lawmakers missed out on an opportunity to strengthen the polluter pays principle through a carbon border tax on cement imports and an end to free pollution permits for the sector.

Backtracking from earlier compromise, certain political groups, led by the conservatives pushed through changes that significantly watered down the Parliament’s position.

The lawmakers voted against deeper emissions reductions, an end to free pollution permits for the cement sector, and a carbon tariff on cement imports – the so called border adjustment measure.

Agnes Brandt, Senior EU Policy Officer said:

“With today’s vote the European Parliament is backtracking from the Paris climate agreement that it ratified with great fanfare only a few months ago. Complementary measures to the carbon market are now required to make sure that we will have a shot at limiting the global temperature rise to levels that are considered safe.”

Agnes Brandt continued:

“By rejecting border tax for cement and continuing with handouts of pollution freebies, lawmakers pay only lip service to the sector allowing it to continue on its current highly unsustainable path. The border tax would have helped create a level playing field and make European cement industry a world leader in low-carbon technologies.

There is no proof of carbon leakage in the cement sector, and the industry has made over €5 billion windfall profits from receiving too many free permits.

The border adjustment measure would ensure that domestic and foreign producers are subject to the same carbon price. It would be a better way to protect the European industry than free allocation. Such a measure is also gaining increasing support from experts, innovative industry representatives, investors, and lately even from industry giants like ArcelorMittal.

The European Parliament did however decide to include shipping in the EU ETS in the absence of climate action at the global level and strengthened the rules for the aviation sector.

Kelsey Perlman, Policy Officer said:

The aviation and maritime sectors have flown under the radar for far too long. Today’s vote puts the EU back at the helm of dealing with these sectors’ growing climate impact.

-ENDS-


Media contacts

Dr. Agnes Brandt – Senior EU Policy Officer
agnes.brandt@carbonmarketwatch.org
Tel: +32 483 22 75 71

Kelsey Perlman, Policy Officer – Aviation and Shipping
+32 487 13 02 80
kelsey.perlman@carbonmarketwatch.org

Kaisa Amaral, Press Officer
+32 485 07 68 90
kaisa.amaral@carbonmarketwatch.org


Notes to editors

The Parliament voted against the environment committee’s proposal to increase the rate at which the overall cap on emissions is lowered annually from 2.2% proposed by the Commission to 2.4%. The plenary voted to keep it at 2.2% with a possibility of revising it upwards to 2.4% in 2024.

The EU environment ministers will discuss the proposal with the aim to reach a common position at their next meeting on 28 February. Following this, the European Parliament and EU Member States will start their negotiations on the file in order to reach a final agreement, which is expected by the end of 2017.


Resources

Cement briefing here

Windfall profit briefing here

CE Delft analysis here

Cement infographic here