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.

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

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

The Ukrainian crisis to destabilize Europe and the world for a long time

Impacting society with digital ingenuity – World Summit Award proclaiming the top 8 worldwide

MARKUP initiative to boost market access to Europe for East African SMEs

EU budget: Commission proposes most ambitious Research and Innovation programme yet

The Parliament paves the way for the creation of the European Banking Union

Syria: Why did the US-Russia brokered ceasefire collapse? What does the duo care for?

Libya: Attack on foreign ministry, an attack on all Libyans, stresses UN envoy

DR Congo elections: ‘Excessive use of force’ in campaign must be avoided, says Bachelet

ECB’s Draghi favours a cheaper euro to serve all Eurozone countries

How many more financial crises in the West can the world stand?

Cultural Intelligence: the importance of changing perspectives

Why the merchant ships can pollute the atmosphere with CO2 quite freely

Here’s how we can tackle the growing cybersecurity skills gap

70 years after the Universal Declaration of Human Rights, this is why we need dignity more than ever

How telehealth can get healthcare to more people

Why South Africa is on a path of economic renewal

G20 LIVE: The European Sting covers online world news and the latest developments at G20 from Antalya Turkey

US prosecutors now target Volkswagen’s top management, upsetting Germany

Hollande protects the euro from the attacks of extremists

UN rights experts call on Russia to release Ukrainian film-maker whose life is in ‘imminent danger’

‘Collective endeavour’ needed to strengthen peacekeeping further, says top UN official

Boom in Artificial Intelligence patents, points to ‘quantum leap’ in tech: UN report

Is Haiti better prepared for disasters, nine years on from the 2010 earthquake?

Eurostat confirms a dangerously fast falling inflation in Eurozone

‘Global care crisis’ set to affect 2.3 billion people warns UN labour agency

DR Congo: Ebola response resumes despite ‘risky environment’

All sides in Yemen conflict could be guilty of war crimes, UN experts find

Eurozone: The cycle of deficits, debts and austerity revisited

European Youth Capital 2019 announced: Novi Sad, Serbia

We have to fight for a fairer tech industry for women

European Banking Union: Like the issue of a Eurobond?

Capitalism’s greatest weakness? It confuses price with value

Trump to subject the Fed, challenge the ECB and make Wall St. bankers even richer

Restoring prospect of peace in Middle East is ‘our shared responsibility’ UN envoy tells Security Council

How banks should prepare for robots going rogue

Medical Education is #NotATarget

Armenia should take vigorous measures against entrenched corruption

The EU pollution rights trading system frozen

UN chief hails victory of ‘political will’ in historic Republic of North Macedonia accord

The EU Consumer Policy on the Digital Market: A Behavioral Economics View

European Commission adopts new list of third countries with weak anti-money laundering and terrorist financing regimes

The EU Commission implicates major banks in cartel cases, threatens with devastating fines

US-North Korea summit ‘an important milestone’ towards denuclearization, says Guterres

Migration crisis update: lack of solidarity not only among EU leaders but also EU officials

More urgency needed to help increasing numbers ‘locked out’, before 2030, says UN’s Bachelet

Solutions for cultural understanding: medical students’ perspective

“Our house is on fire.” 16 year-old Greta Thunberg wants action

Venice will now start charging tourists an entrance fee

Did Draghi ask the Germans to accept a drastic change of austerity policies?

Facebook and Google to treat Europe as the 51st State of the USA

How China raised the stakes for electric vehicles

The deforestation risks lurking in the banking sector

EU to lead one more fight against climate change at G7 summit

Trade, taxes and other takeaways from Li Keqiang’s speech to the World Economic Forum

How well you age depends on what you think of old age

Why Sweden’s cashless society is no longer a utopia

How and why Mercedes fakes the EU fuel consumption tests

Eurozone: Negative statistics bring deflation and recession closer

The Americans are preparing for the next financial crisis

The rise of alternative medical practices in modern sports

More Stings?

Trackbacks

  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:

WordPress.com Logo

You are commenting using your WordPress.com 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