A leaked European Commission document suggests that pollution subsidies to industry under the EU’s Emissions Trading Scheme will increase to around €150 billion after 2020. The subsidy is under consideration because some industry sectors claim that the EU’s carbon market puts them at a competitive disadvantage, when in fact carbon pricing has been successfully introduced in many other regions as well. The proposal to shield industry from Europe’s main climate instrument sends the wrong signal ahead of the climate summit in Paris in December where countries are expected to sign a global climate agreement applying to all sectors and regions.
Dear Mr Schneider and Mr Buendia,
As a Member of the European Parliament committed to the respect of Human Rights, we are writing to you to express our serious concern about the Santa Rita Hydroelectric Plant in the Dolores River in Guatemala, which was registered under the Clean Development Mechanism (CDM) in June 2014 (project number 9713).
In a meeting in March 2015 with a representative of the local indigenous communities we learnt that many of the communities that will be impacted by the project were never consulted in accordance with the CDM local stakeholder consultation requirements. As a result, the project has been, and still is, in the center of a violent conflict between the communities and the power company implementing this project.
This week, European policymakers have provisionally agreed on a fix for the EU’s carbon market that is suffering from an oversupply of pollution permits and yielding record-low prices. While this is a great step forward, a permanent solution to tackle the glut of pollution permits is needed as part of the upcoming legislative proposal to overhaul the EU’s carbon market for the period after 2020.
This week, the European Commission released new data on the number and origin of carbon offsets used in 2014 by companies in the EU’s carbon market. Despite new eligibility criteria to incentivize investments in poor countries, the majority of offsets come from China, Ukraine and Russia. Moreover, lack of transparency gives a carte blanche to companies to choose projects with negative environmental and social impacts. As policies for large scale mitigation investments are currently being designed, these findings can provide valuable lessons.
As the EU and Switzerland are about to conclude the technical negotiations to link the EU and Swiss carbon markets in the coming months, a new policy brief and report by Carbon Market Watch show that the EU must increase its climate target to avoid diluting domestic emission reduction obligations with foreign allowances from the Swiss carbon market.
6 May 2015, Brussels. European policymakers provisionally agreed to start implementing the reform of the EU’s Emissions Trading System on 1 January 2019 and put the pollution permits that were due to come back to the market by 2020 directly into the new Market Stability Reserve. Carbon Market Watch welcomes this first step to fix the EU’s carbon market but cautions that the upcoming revision of the EU ETS will need to permanently tackle the glut of pollution permits.
5 May 2015, Brussels. As the EU and Switzerland are about to conclude negotiations to link the EU and the Swiss carbon markets, a new report shows that benefits of linking carbon markets may be outweighed by the risks, such as reduced overall emissions abatement, lower domestic investments and co-benefits as well as a loss of public funds. The report also finds concerns about public participation and transparency provisions and provides recommendations for the EU ETS revision.
The number of regions and countries that are putting a price on carbon pollution is vastly increasing. Nearly 40 countries already price carbon or plan to do so, including China that will roll out a national carbon market from 2016 onwards. Linking these different carbon markets is being envisaged by several European policymakers.
Jurisdictions with carbon markets currently account for about 40% of global economic activity (GDP)[1]. Linking these different carbon markets with the ultimate goal of establishing a global carbon market is seen as an integral part of the future climate regime, since it can increase the pool of mitigation options available, thereby reducing costs and allowing countries to increase their climate ambition. These benefits however only materialize if the linked carbon markets have a similar level of ambition and a similar design of a number of key features, such as price controls, quantitative and qualitative restrictions on carbon offsets, and the type of allocation method used. Paradoxically, while lower abatement costs are an important economic motive for linking two emission trading systems, they can also constitute a significant political barrier, since citizens of the higher cost system might be reluctant to pay for emission reductions in the other jurisdiction.
