Advocating to scrap the EU Emissions Trading Scheme = Advocating for climate policy that works

The EU Emissions Trading Scheme (ETS) is in trouble – big time. That much most analysts, policy makers, politicians, carbon traders, industrial polluters and NGOs agree. When it comes to diagnosis of the causes behind the symptom, prescriptions, or what to do with the ailing patient, opinions diverge. As outlined in the statement “Time to scrap the ETS”, our investigation of the EU ETS concludes that far from being ‘the most effective climate change policy instrument in Europe’ the EU ETS has been shown to be a major obstacle to effective climate action – and should therefore be abolished.

1.     Calling for an end to the EU ETS means joining hands with the fossil fuel industry and climate deniers who are also calling to reject the proposal to withhold ETS permits.

It is instructive to look at who is lobbying for the ETS to be rescued. Companies including Shell, Statoil, the Carbon Capture and Storage Association, E.On and Électricité de France have lined up to support the EU’s efforts to rescue the ETS in hand with financial actors such as carbon traders, brokers and verifier firms. These are companies that profit from selling or using fossil fuels and trading carbon and hence wish to restore confidence in the collapsing market. Obviously they are not lobbying for meaningful emissions cuts, or structural changes that would bring industrial use of fossil fuels to an end.

2.     The ETS is the only feasible option available to address climate change.

For seven years we have heard that trading carbon is the ‘only option’. Yet, on closer inspection, the ETS has turned out to be a major obstacle to transformative action on climate change in the EU. The existence of the EU ETS has fed the illusion that a market-based instrument focused on pricing can trigger the changes needed to transform our energy infrastructure and the way our economies produce and consume goods. No such change has ever been brought about by a trading instrument.[iii]

The ETS is an example of how regulation that works for the climate has been pushed away in favour of regulation that favours unproven market-based mechanisms. Industries have lobbied for many years to avoid real action by heavily opposing any policy that would bind them to reduce emissions at source. Abolishing the ETS is therefore not only badly needed so space is created for starting a real transition, but also to counter the dangerous reliance on ‘free market’ mechanisms for areas other than carbon, such as biodiversity or water.

3.     Scrapping the EU ETS will be seen as a failure of EU climate policy. This would damage the international climate negotiations that are facing enough difficulties already as it is, and thus making future international action to tackle climate change even harder.

Keeping a failing policy will be – and in due course, will also be seen as – a failure of EU climate policy and will damage EU credibility. Scrapping the EU ETS now, acknowledging that the experiment didn’t work as intended and replacing it with action that brings about a just transition away from fossil fuel dependence and leaves future generations with a fair chance to avoid uncontrollable climate change, will be seen as a success.