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.
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.
Sharing experiences with existing climate mitigation mechanisms, such as the Clean Development Mechanism (CDM) and highlighting the severe impacts on basic human rights these UN mechanisms can have, activists from Africa, Asia and Central America met with financial institutions and policy makers involved in financing these projects. The accountability of climate finance was thereby discussed from a European perspective.
Last week in an event in the European Parliament, various stakeholders discussed experiences with existing climate mechanisms against the future climate finance policy landscape, where potentially huge amounts of climate finance will not only be channeled through the Green Climate Fund (GCF) but also through bilateral agreements and other instruments where it is still unclear what types of safeguards and compliance mechanisms will be applicable and how the respective public and private stakeholders involved will be accountable.
On 24 October 2014, the European Council agreed on the 2030 framework for climate and energy [1], including a binding domestic target for reducing greenhouse gas (GHG) emissions of at least 40% in 2030 as compared to 1990. To meet this target, the European Council agreed that the emissions in the EU Emission Trading System should be reduced, compared to 2005, by 43%. A reformed EU ETS remains the main instrument to achieve the emission reduction target. The cap will decline based on an annual linear reduction factor of 2.2% (instead of the current 1.74%) from 2021 onwards, to achieve the necessary emission reductions in the EU ETS. The European Council furthermore gave strategic guidance on several issues regarding the implementation of the emission reduction target, namely free allocation to industry, the establishment of a modernisation and an innovation fund, optional free allocation of allowances to modernise electricity generation in some Member States.
In February members of the European Parliament voted to start the reform of the EU’s carbon market by 2019, and put almost 1.4 billion pollution permits that were due to come back to the market by 2020 directly into the new market stability reserve (MSR). Unfortunately the reform does not provide a structural solution for the lacking environmental effectiveness of the EU ETS, as around 800 million surplus allowances are allowed to flow back to the market again before 2030, diluting the EU’s 2030 target by 3%.
Brussels 24 February. Today the European Parliament’s environment committee took the first steps to reform the EU’s Emissions Trading System. Following intense pressure from forward looking investors and civil society, policymakers agreed to curb the total amount of pollution permits in the system that would otherwise flood the market by 2020. This is expected to result in a stronger carbon price signal in order to let the polluter pay and support climate friendly investments in Europe. Policymakers unfortunately failed to agree to a timely start of the new Market Stability Reserve which will only become operational by 2019.
On Tuesday 24 February, Members of the European Parliament will cast a crucial vote on the future of Europe’s flagship climate instrument, the EU’s Emissions Trading System (EU ETS). Failure to reform Europe’s carbon market could sink the emerging network of global carbon trading systems and have profound consequences for the success of the international climate summit in Paris at the end of this year.
Find MEPs by country: Belgium Bulgaria Czech Republic Denmark Germany Estonia Ireland Greece Spain France Croatia Italy Cyprus Latvia Lithuania Luxembourg Hungary Malta Netherlands Austria Poland Portugal Romania Slovenia Slovakia Finland Sweden United Kingdom Belgium Ivo BELET Group of the European People’s Party (Christian Democrats) Belgium Christen-Democratisch & Vlaams Mark DEMESMAEKEREuropean Conservatives and Reformists Group Belgium …
Read more “Members of the European Parliament’s ENVI Committee (Climate Issues)”
Stay in touch and receive our monthly newsletter, campaign updates, event invites and more.
