Carbon Market Watch has today released its position paper advising EU policymakers on the ten top ETS issues they should consider ahead of the anticipated review of the EU Emissions Trading System this summer.

The EU ETS has helped successfully halve emissions from high-polluting industrial, maritime and aviation sectors in the two decades since its inception.

However, EU policymakers are under intense industry-led and fossil-fueled pressure to dent the environmental effectiveness of this crucial climate tool, in favour of short-term corporate profiteering.

Keep it on track

‘Don’t mess with the ETS’ informs lawmakers that they must consider their approach to this revision carefully and outlines how they can improve the system’s functions and maximise its competitive firepower, while delivering on the urgency of the climate crisis.

“Each previous revision of the ETS has led to a stronger and more effective system, and there is still a lot of space for improvements,” said Carbon Market Watch EU policy lead Wijnand Stoefs. “82% of all ETS stationary emissions still come from burning fossil fuels: we need to do better.”

Recipe for success

The paper outlines how policymakers can upgrade the system to help achieve the EU’s 2050 net-zero target. It also demonstrates why industrial polluters have still not started cleaning up their act, how precious resources have been wasted protecting the status quo and how the scheme can mobilise private and public funds towards deep industrial clean transformation.  

“Policymakers must stay the course and not seek to blunt this highly effective climate tool in response to short-sighted calls to shield industrial operators and fossil fuel lobbyists from their responsibilities,” explained Lidia Tamellini, policy expert on EU decarbonisation.

CMW also sets out how greater climate action can be demanded from the aviation and shipping sectors which are currently not pulling their weight relative to their environmental impact.  

“Too many transport emissions go uncovered,” said Jenny Helle, policy expert on decarbonisation of aviation and shipping. “Expanding carbon pricing to all departing and arriving flights would raise an extra €19 billion a year by 2030. All smaller vessels and international shipping voyages need to be covered as well.”

Our paper tackles how best to set up the technical levers of the ETS, while addressing the scheme’s destructive approach to biomass and the interplay between carbon removals and the carbon market (spoiler: we are against their integration, just as we are for international carbon credits).

We also say loud and clear that policymakers must not abuse this revision to further dilute or delay the new carbon pricing scheme for road transport and building emissions (ETS2).  

“The constant tinkering with ETS2 must stop. EU policymakers should instead focus on actions that actually support people in the transition such as delivering strong Social Climate Plans and complementary climate and social policies. EU countries are stalling instead of putting the available funds to work” stated Emma Wikström, policy expert on EU carbon markets.  

Growing support

Despite the political noise, support for the EU ETS is growing.

“There is widespread demand and an urgent need for strong and predictable carbon pricing in Europe,” points out Wijnand Stoefs. “Now is not the time to backslide on the impressive regulatory achievement that is the ETS. Policymakers must stay the course. Don’t mess with the ETS.”

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