Carbon Market Watch Newsletter – November 2020

‘Carbon removals’ must be approached with caution

Carbon removals are becoming a hot topic and are also rising up on the EU’s policy-making agenda. There is no denying that we will need to suck CO2 pollution from the atmosphere over the course of this century to avert the worst impacts of the climate crisis. But before carbon removals can become a part of any climate strategy, a strict set of principles is needed. A very basic question that needs answering is: does the technology or nature-based practice really remove atmospheric CO2? We don’t have time for false solutions.

At the same time, our immediate focus must remain on reducing emissions. In this regard, the latest annual report on the functioning of the EU’s carbon market contains little good news. For the 9th year in a row, industrial CO2 pollution hardly went down. That from aviation grew by 1%. Almost half, 43%, of the pollution permits on the market were handed out for free. Under the current rules, there is simply no incentive for companies to clean up their production. The upcoming carbon market review will be yet another opportunity to change this. Polluting for free in times of a climate crisis is unacceptable and we cannot afford to postpone the necessary changes any longer. The European Commission is also working on the potential future carbon border adjustment measure, as a replacement for the carbon market free allocation. If designed properly and fairly, this tool could drive the clean industrial transition and emission reductions globally. Ideally, foreign importers would buy emission allowances on the EU carbon market and the revenues would be channelled back to climate action, both internationally and within Europe.

The UN shipping body IMO delivered a huge blow on global climate action earlier this month. In what seems to be a total disregard for the real-world effects of the climate breakdown and the need for urgent action, governments agreed to allow pollution from ships to keep growing until the end of this decade. This failure underlines the need to act at the regional level. In Europe, this means, in particular, bringing the sector under the EU carbon market. This is foreseen to happen in the context of the review starting next year. The European Parliament is ahead of the curve, having proposed that this takes effect from 2022.

This is the last edition of Carbon Market Watch News in this turbulent year of 2020. We wish everyone a peaceful holiday season and look forward to connecting again in January. Take care and stay safe!

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