15th Feb, Strasbourg – Today the European Parliament voted to stop the EU Emissions Trading System from providing adequate signals for the transition to a prosperous low-carbon economy. In doing so, Europe’s emission reductions in 2030 are very likely to be out of line with the commitments the EU signed up for when ratifying the Paris Agreement, and out of line with the EU’s own 2050 targets – there is a serious risk of policy lock-in.
The Parliament voted to keep the cap wildly out of step with real emissions, so perpetuating the surplus of allowances in the System. They also kept the Linear Reduction Factor at 2.2%, meaning the cap will tighten even more slowly than hoped and the EU is not on track to meeting even the lower end of its 2050 targets.
In addition, free allocation to the top emitters is due to increase even further following today’s vote, which means that means the industry is now following an increasing emissions trajectory, contradicting the principle of a decreasing trajectory which is the basis of the ETS.
Rachel Solomon Williams, Managing Director at Sandbag said:
“This is very disappointing and a hugely wasted opportunity. Unless Council intervenes to substantially strengthen the System, the EU ETS will now become simply an accounting mechanism, leaving meaningful climate action to happen elsewhere. The fact that the carbon price is unchanged as a result of the vote, still at a paltry €5, speaks volumes.
Without being realigned with real emissions levels in 2020, the EU ETS may well end up existing for 25 years by 2030 without giving any substantial impetus to decarbonisation.”