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This evening is likely to see the final trialogue in an ETS reform process that began back when Obama was President, the UK hadn’t yet voted for Brexit, and our main worry was how to perfect our Gangnam Style.

 

Back in July 2015, the Commission’s reform plans were widely criticised for lack of ambition. They have been much improved, most notably in a cancellation clause which will remove a large number of surplus allowances from the Market Stability Reserve. But the carbon market is still on course for another decade with an irrelevant single digit carbon price.

 

Today civil society across Europe are releasing an open letter calling on the EU negotiators to pull a rabbit out of a hat, and make two changes to the carbon market to put the European power and industry on the right track to rapidly and cost-effectively cut their emissions:

 

  1. Stop allowing ETS funds to subsidise coal plants – Keep the EPS in the ETS.
    • the International Energy Agency’s (IEA) modelling shows that unabated coal in Europe must fall to zero by 2030. The ETS Innovation, Modernisation and other funds must not be used to fund repairs to dirty coal plants. This means an unambiguous 450gCO2/kWh emissions performance standard.
  2.  Ensure a meaningful carbon price that begins to drive decarbonisation
    • With current reform proposals, the surplus in the ETS will be a similar size in 2025 as it is today – inevitably, the carbon price will not change much either. The supply of ETS must be made responsive to demand: actual emissions.

 

The European Parliament, Council and the European Commission still have a chance today to ensure that European power and industry are put on the right track to rapidly and cost-effectively reduce their carbon emissions, whilst driving low-carbon growth.

We urge them to take that chance.

The letter has been signed by:

Carbon Market Watch
CEE Bankwatch Network
Center for Transport and Energy
Change Partnership
Climate Action Network (CAN) Europe
EfdeN Romania
Sandbag
WWF EPO
Young European Federalists
11.11.11