Parliament votes reform for better European Co2 market but critics want it sooner than later

Tough to compromise climate energy with industry? Not for Miguel Arias Cañete, Member of the EC in charge of Climate Action and Energy, who received the CEOs of the energy intensive industries earlier in the month. (EC Audiovisual Services, 19/02/2015)

Tough to combine climate action with industry? Not for Miguel Arias Cañete, Commissioner in charge of Climate Action and Energy, who received the CEOs of the energy intensive industries earlier in the month. (EC Audiovisual Services, 19/02/2015)

Yesterday at the European Parliament a crucial vote for environmental protection was cast. The Environment Committee of the Parliament made a decisive step towards the limitation of greenhouse gas emissions in the Old Continent, combatting climate change. What is known as the biggest carbon emission market in the world, the EU, will be tackling the issue with a substantial reform in its Cap-and-Trade system, which was voted only yesterday.

Cap-and-Trade systems

Cap-and-Trade systems is another proud European invention. Today it is a global environmental plan, used by most of the developed world, in order to limit industrial carbon pollution. Big industrial plants under these preferred systems have a cap or limit to which they can emit Co2. The companies that pollute more than this cap, mostly due to their size and not because they want to destroy the planet, they can then buy “pollution rights”. So you got it well; there is a price per metric tone of Co2 that the big industrial plants of Europe and the world can “purchase”. On the other hand, if an industry emits less than their “cap”, they can “trade” the remaining with other fellow companies in the “carbon market” auction. In any case, companies need to reach their “carbon cap” on an annual basis, otherwise a heavy fine is imposed to them.

Europe’s pioneer Cap-and-Trade system, the largest one in the world, is called “European Union Emission Trading System (EU ETS)”. Yesterday’s vote by the MEPs is aimed at strengthening ETS and making it more competitive and effective. One of the big problems that the EU crisis has brought to Europe, besides unemployment and life standards deterioration, was the drop of the price per Co2 metric tonne in the carbon market (ETS). This mainly happened because production and demand was low and thus “nobody” needed to buy those “redundant” extra metric tonnes of Co2. Thus, the price from €30 in 2008, at the beginning of the crisis, tumbled down to less than €7 per tonne last January, to close to €7.60 only yesterday. One can understand that with Co2 “on sale”, European industries all those years were not so keen or motivated to pollute less the environment. In addition to that, an approximate excess of 2 billion Co2 tonnes flooded the European market.

The reform

It was high time for a reform by the lawmakers of Europe to fix this. Yesterday with 57 votes in favour, 10 against and one abstention, the environment committee of the European Parliament proposed a legal reform text to be immediately negotiated with the Commission and the Council, without the urgent need of a plenary vote. According to this proposed reform, a “market stability reserve” (MSR) will be able to secure the “well-being” and competitiveness of the European carbon market. Consequently all the excessive carbon allowances surpluses will be removed from the market and put into the MSR. Thus, price fluctuations and surpluses will be confined in this way.

Nevertheless, as always, in the 28 nation bloc it is usual that not all member states nod along. Particularly in this case there has been substantial criticism on the timeframe set yesterday at the European Parliament. To be noted here that the European Commission had initially set the date of 2021 for the reserve to be fully operational, while some powerful member states like UK, France and Germany wanted to set 2017 as the “green” deadline. Finally, the Parliament yesterday agreed to meet somewhere in the middle, setting the end of 2018 as the year the Market Stability Reserve would kick-off.

The Critics

It goes without a say that critics ran as early as yesterday evening to underline this significant delay. Freak de Jong, policy officer at Carbon Market Watch said to the Guardian on the matter: “Postponing necessary reforms until 2019 is simply irresponsible in times of a climate crisis”…“Every year we wait with setting up the reserve, the surplus that is suffocating the EU carbon market will grow bigger, pushing the EU’s cornerstone climate instrument closer to the brink of collapse.” Furthermore, Sam Van des plas, WWF Climate and Energy Policy Officer, said to Euractiv: “The ETS now has accumulated a massive oversupply of emission allowances and it’s not delivering the carbon price signal that we need. If this is not dealt in Brussels, then member states will take the matter in their own hands and we will look at carbon taxation policies, standards for the power sector. So it needs to be dealt with urgently”.

The supporters

At the same time, many voiced their opinions in favour of the environment committee’s decision. “The European Parliament is sending a strong signal that it is serious about fighting climate change while at the same time bearing in mind the concerns of industry,” stated MEP Ivo Belet to Bloomberg. What is more, MEP Gerben-Jan Gerbrandy, stressed:  “The environment committee has sent a strong signal to the council by substantially improving the commission proposal” …“The ETS should start working again to facilitate the transition to a low-carbon economy.”.

Even the member states that wanted the reserve running in 2017 and not in 2019 like the MEPs voted yesterday, have expressed a reserved optimism of the measures taken. The Guardian captured a quote by the British Labour MEP Seb Dance on the issue: “We still believe that this reform should come sooner rather than later”…“However, the compromise deal does represent a significant improvement on the suggested start date of 2021. We have ensured that the number of backloaded and unallocated allowances will be reduced and won’t be returned to the market, which would lead to further destabilisation.”

All in all, the voted reform in the EU’s Emission Trading System (EU ETS) is certainly a positive step in regaining competitiveness in the EU carbon market, as it will restore low prices and will manage the excessive CO2 “credits”. The Sting will follow closely the matter, as it will evolve through the imminent negotiations of the Parliament, the Commission and the Council for the law to get its solid and most effective form.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

European Commission pledges additional €30 million in immediate support for Lebanon

6 of the world’s 10 most polluted cities are in India

Can Argentina’s new president save the country’s economy?

COVID-19: Member states need to harmonise health assessments and measures

Decade ending 2019 likely to be hottest on record

How face masks, gloves and other coronavirus waste is polluting our ocean

Coronavirus fears may have driven over 300,000 UK smokers to quit

MEPs vote to limit negative impact of no-deal Brexit on citizens

Opening – EP remembers Nelson Mandela and mourns attacks on Roma in Ukraine

Turkish and Greek Cypriot leaders ready for talks with UN chief on improved relations

Venezuela: European Parliament calls for additional sanctions

Coronavirus: Member States agree on an interoperability solution for mobile tracing and warning apps

Syria: UN Humanitarian Coordinator calls for unimpeded access from within the country

Azeri natural gas will keep the EU warm soon

Three ideas for leaders to be more successful in the 21st century

Keep Africa’s guns ‘from firing in the first place’, UN political chief urges

Blockchain will make sure green pledges aren’t just greenwash: a new initiative by young leaders at the World Economic Forum

France is about to start giving free breakfasts to disadvantaged schoolchildren

A new crop of EU ‘Boards’ override the democratic accountability and undermine the EU project

EU: Centralised economic governance and bank supervision may lead to new crisis

Where does our food come from? Here’s why we need to know

Appalling overall unemployment in Eurozone at 20.6%

Climate change update: will the UN member states regain momentum despite the little progress at COP23?

A guide to thriving in the post-COVID-19 workplace

European Commissioner for Youth wants young people to be at heart of policy making

The EU to bear the cost of eventual sanctions against Russia

Investing in working conditions and quality jobs

Resettlement: EU Member States’ pledges exceed 30,000 places for 2020

The first new university in the UK for 40 years is taking a very different approach to education

Primary Healthcare should be strongly connected with initial education

Tax crimes: special committee calls for a European financial police force

AI looks set to disrupt the established world order. Here’s how

Quicker freezing and confiscation of criminal assets in the EU

Banks launch green charter to help shipping reduce its carbon footprint

Inflammation is the fuel that feeds the cancer flame. So how do we fight back?

New challenge: Not going through “burnout” in times of quarantine

Which country offers the cheapest mobile data?

Towards the Rise of the United States of the Atlantic?

Car clocking: MEPs call for new legislation to combat odometer fraud

Implementation of tax transparency initiative delivering concrete and impressive results

Afghanistan: EU reinforces humanitarian support with €40 million as crisis worsens

Gaza probe finds ‘reasonable grounds’ Israeli forces committed international human rights violations

EU and Japan select first Erasmus Mundus Joint Master Programmes

Gynecologic care in the 21st century

A call for a new crop of innovators

A Europe that Protects: Commission calls for continued action to eradicate trafficking in human beings

Migrant children at US border have right to protection and ‘be with their families’: UNICEF chief

The new general election will secure Greece’s position in Eurozone; at least for some time

This is what a smart city should do for its people

German political spillovers: ECB’s Draghi resists first attacks by AfD

Ahead of key UN-backed Marrakech migration conference, youth recount harrowing journeys

FROM THE FIELD: Malawi farmers diversify to fight climate change

More funding needed to combat locust swarms ‘unprecedented in modern times’

New Mozambique storm rips off roofs, brings lashing rain as aid response kicks in

Parliament names radio studio after journalists murdered in December attack

Forget retail therapy – this is the age of the conscious consumer

Early signs of growth in Eurozone?

How fungi could save the world

‘Preserve, revitalize and promote’ indigenous languages, or lose a ‘wealth of traditional knowledge’, UN chief says

COP21 Breaking News_09 December: The Draft Agreement Updated

More Stings?



  1. […] bring about new and additional costs to doing business. In fact, the European Parliament has just voted to reform the European carbon market, removing available credits and effectively increasing the […]

Speak your Mind Here

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s