Europe needs to fix or ditch its emissions trading scheme
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Version 0 of 1. If leaks are to be believed, when European council members meet next week, they will agree a headline target of a 40% cut in greenhouse gases by 2030 and a rag bag of assorted, non-binding targets that are intended to add up to a coherent energy and climate package. They don’t, but the good news is it probably doesn’t matter. Of course a perfectly balanced, rational policy package would be good but that’s not going to happen, with the commission fighting internally, a parliament lacking teeth and member states out to win what they can to protect their own special interests. Given the legal target for renewable energy for Germany, interconnectors for Spain and Portugal, state aid clearance for nukes for the UK, special protections from carbon pricing for Romania, combined purchasing of gas for Poland, it was never going to be easy putting together something that made sense. Looking back, it seems amazing that three legally binding targets, all neatly set at 20%, were agreed in 2008, the last time such an attempt was made. Back then the sense of purpose on climate was stronger. This was pre-recession and before the terrible let down of the Copenhagen international climate talks. Also the implications of the targets were not as visible. I don’t believe anyone had a proper vision of what a 20% renewables goal across all of energy was going to deliver when it was agreed. But today, on sunny and windy days, large volumes of renewable power are being generated, causing energy prices to tumble. In energy efficiency too, I doubt anyone saw the speed with which LED lighting would penetrate the market, or that increased demand from new appliances would fall off. As the ‘20/20/20 vision’ has become reality, the appetite to continue with the sub targets has diminished. Partly because opposition has increased from those who previously enjoyed the status quo and partly because it is getting more apparent that many clean technologies don’t or won’t need help for that much longer. So the good news is emissions are likely to continue falling in Europe, irrespective of what the European council decides next week. But this creates a challenge. Having abandoned the neat, triple targets approach, the council will most likely try to place the focus back on the technology neutral, catch-all policy of the Emissions Trading Scheme (ETS) to deliver our carbon emissions targets. In theory it is a great tool. In practice the caps on emissions it creates were set too high and are now also failing to keep pace with the trends mentioned above, creating a very low price incentive. The text agreed next week will no doubt recommend policy changes but these are likely to be too little, too late because there appears to be an immovable political obstacle to considering changes before 2020 (did someone say Poland?) and this is big problem. New analysis by the climate think tank Sandbag predicts that by 2020 the ETS could be so over-supplied with tradable permits that it will be almost completely irrelevant. It won’t die of natural causes, however, as the legislation will keep it going indefinitely, mildly annoying industry and dismally disappointing everyone else. Unloved and unpopular it could still persist like a lame cuckoo in the nest, crowding out any possible alternative policies that might be more effective. Throwing it, and the huge surplus, away right now would be beneficial for the environment, as it would remove the ‘hot air’ or spare allowances that have built up which weaken the effect of the 2030 target. Still, it is possible that the political signal sent by the council next week will be enough to put wind in the sails of a legal proposal to fix the ETS that is already on the table. Sandbag certainly hopes so. It’s time to pass robust new laws within the next 12 months to fix the ETS or stop and do something different instead. • Bryony Worthington is founding Director of the Sandbag Climate Campaign |