Emissions Trading

Latest proposals from the French Presidency (18 November) are startling in that they attempt to fundamentally reverse some of the core foundations of the EU ETS. They cover:

  • Carbon leakage – the 20% starting threshold for auctioning in the non-power sector is deleted which reverses an iconic improvement to the Commission’s proposal on the use of auctioning
  • Financial compensation for indirect emissions – another iconic change to the whole ETS!! The ETS has focused on direct emissions only so allowing member states to use their tax-payers income to subsidise polluting industries is a real set back for EU climate policy at the expense of EU citizens.
  • Price caps – this puts a limit on the price increases and makes the EU ETS in effect nothing more than a CO2 tax!!
  • Earmarking auctioning revenue – proposal contains non-binding langauge (see the use of the word “should” in place of “shall” in the opening sentence) and is therefore still redundant
  • CCS Financing – At least this now covers a basket of technologies that require additional financial assistance to become commercially deployable.

So at the moment it looks like EU Member States are sinking the EU flagship climate policy and surrendering any global moral, ethical and political leadership. The EU ETS was the first time that the EU actually took a positive role in addressing this global issue but it looks like it has gone back to the days of the Montreal Protocol (1980’s) when it denied the hole in the ozone layer and blocked the USA’s attempts to get an international treaty to make polluters (mainly dirty Europe) take action!

Document:

Presidency compromises – 18 November 2008

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