Trading system is anti-climate

The trading system is delivering such a low price for carbon that it is cancelling out the gains delivered by energy efficiency directives. This is because far too many permits have been issued to electricity generators and heavy industry. Sandbag is now calling for the deletion of 1.7bn surplus allowances.

In a new report entitled “Drifting Towards Disaster”, the authoritative group argues that not only is the ETS failing to reduce emissions, but the existence of so much surplus has cancelled out 700m tonnes of emissions which would otherwise have been avoided by directives like the Energy Performance of Buildings directive, the Energy Services Directive and the CoGeneration Directive. Both the last two directives have already been repealed.

The report warns that even though the European Parliament has reversed its earlier vote and agreed to delay temporarily the introduction of a further 900m allowances now (a process termed “backloading”), this is only a “first step to prop up the market.” Sandbag argues that a far more ambitious long-term fix is urgently needed.

This vast surplus of emission permits “now threatens to make the EU:ETS into an anti-climate policy, cancelling out nearly a billion tonnes of emissions reductions delivered by other climate policies over the 13 tear horizon between 2008 and 2020, “ the report says.

This autumn the European Commission is set to present a structural reform package for the trading system in October. However, both Business Europe and the Polish Government have warned about interfering in the market. They argue that the original emissions cap set under the scheme is being complied with; hence there is no need to interfere.