Pressure is mounting on the EU to raise the carbon price under the Emissions Trading System (ETS) – the EU’s main tool for reducing industrial greenhouse gas emissions. The European Parliament’s Industry, Research and Energy Committee has just voted by a significant majority in favour of withholding carbon allowances in the ETS – a move that would increase the carbon price if it were adopted.
The price of carbon has collapsed in recent years – mainly due to the financial crisis, which reduced industrial production and therefore emissions, flooding the carbon market with surplus emissions allowances. This has seriously impacted the effectiveness of the ETS.
The vote came as part of discussions on the Energy Efficiency Directive. The Parliament’s Environment Committee had already voted in favour of the move at the end of January.
“It is good to see two important Parliamentary committees recognise the impact the economic crisis has had on the effectiveness of the ETS, and propose solutions to fix it,” comments Remi Gruet, Senior Regulatory Affairs Advisor for Environment and Climate at the European Wind Energy Association. “The European Commission and Council must now support and implement measures to withhold carbon allowances so that the ETS can rapidly start reducing Europe’s emissions as it was designed to do.”
The recent European Commission paper on the impacts of moving beyond a 20% emissions reduction target shows that it is possible to withhold emissions allowances without harming the lower-income countries in the EU.