New hope for Europe’s carbon market?

The latest EU carbon market data shows a record fall in CO2 emissions. But while the power sector pollution is on a steady decline year after year, for heavy industry, last year’s pandemic-induced drop is likely going to be short-lived. Industrial emissions in Europe have not reduced in the past decade and are not expected to do so in this one. At the current pace, sectors such as steel, cement and chemicals are not expected to be climate neutral before 2060 – way too late for Europe to meet its new climate goals. This is why the upcoming revision of the carbon market rules is so important. EU policymakers should increase the pace at which emissions go down and make sure that all polluters pay a price.

Just in time for US President Biden’s “Leaders’ Summit”, EU policymakers struck a deal on the Climate Law and 2030 target, agreeing to cut emissions by at least 55%. It may look like a great leap forward on paper (though it’s not in line with Europe’s fair share of global climate action). But the agreement contains the possibility for governments to delay real emission reductions in sectors like agriculture and transport, if they plant trees, for example. Putting these two on an equal footing is dangerous. Carbon emitted by cars will stay in the atmosphere possibly for a million years. While forests and land absorb some of it, there is no guarantee that it’s not released back into the atmosphere even after a very short period of time.

The Leaders’ Summit itself saw a lot of talk and some concrete action. The US, UK and Norway, together with Amazon and other big companies, announced a 1 billion USD initiative to buy carbon credits from forestry projects. Financing forest protection is welcome and urgent. But it cannot be used to compensate for the continued use of fossil fuels. While the initiative has good elements, it doesn’t rule out the possibility that companies abuse the system by claiming that forestry offsets make their product “carbon neutral”.

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Despite claiming to be champions of climate action, two dozen of the world’s largest and richest corporations are hiding their climate inaction behind the fig leaf of green-sounding ‘net zero’ plans, concludes the 2023 edition of the Corporate Climate Responsibility Monitor. For that reason, governments must stop their dithering and regulate robustly what green claims companies are permitted to make.

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