The carbon market must be reformed quickly to support the 2030 climate goals due to be agreed this week, argues UK
The ETS was intended to encourage heavy industry to invest in cutting carbon
(Pic: Flickr/PKub)
By Megan Darby
The UK is calling for aggressive and urgent reforms to the EU’s emissions trading system, ahead of a European Council meeting this week.
Surplus carbon allowances should be cancelled or suspended and a proposed “market stability reserve” brought in by 2017, the UK argued in a position paper.
The carbon market is expected to deliver the bulk of EU 2030 greenhouse gas emissions cuts to be agreed on Thursday or Friday.
Ed Davey, the UK’s energy and climate change secretary, said: “A strong EU ETS can be a symbol to the rest of the world – but that is not what we have now.
“Europe has the opportunity to show the world how we can cut emissions while creating investment, jobs and growth – but only if we reform the system, and reform it fast.
“Otherwise we’re facing increasing costs for businesses, uncertainty for investment and ultimately higher costs for consumers, which isn’t acceptable.”
EU 2030
Heads of state are set to agree a package of energy and climate targets for 2030 this week. These include a 40% cut in greenhouse gas emissions from 1990 levels.
ETS reforms are not explicitly on the agenda. They are being developed by the European Commission in a parallel process.
But a leaked draft agreement on the 2030 package assumes a reformed ETS will be the main instrument to achieve EU-wide emissions cuts.
The ETS was intended to be a cost-effective way of cutting the greenhouse gas emissions responsible for climate change.
A limited number of emissions allowances are available to power generators and heavy industries, which they can trade.
But the economic recession, coupled with a weak 2020 target, has resulted in a glut of unused allowances, depressing the carbon price.
Fix or ditch
The surplus is 2.4 billion tonnes of carbon dioxide and growing, according to Sandbag. That is roughly equivalent to a year’s emissions for India.
In a report last week, the think-tank said Europe must fix or ditch the ETS in the next 12 months.
The ETS is “set to remain a central plank” of the EU 2030 deal, said Sandbag head of policy Damien Morris.
“But it will be a broken plank if the growing surplus of ETS allowances is not urgently addressed.
“Our latest analysis strongly supports the UK government’s conclusion that a more immediate and aggressive fix to the scheme is desperately needed if the ETS is to deliver the cost-effective emissions reductions that were promised.”