Is There Life After ETS?

By Dave Keating  –  Today, 02:10 CET If the Emissions Trading Scheme does become an irrelevancy incapable of lowering emissions between now and 2020 (see above), then José Manuel Barroso’s declared ambition to put climate change at the top of the agenda during his presidency of the European Commission would be counted a failure. Although environmental campaigners are now among the loudest voices calling for the ETS to be saved, this was not always the case. When the idea of a market mechanism to address the problems of climate change was first proposed, many environmental campaigners were sceptical, to say the least. Then, as it became clear that the ETS was to become the law of the land, some environmental groups clambered on board, joining the business community. However, not everybody joined the party. Friends of the Earth, for instance, has always opposed using a market mechanism as the EU’s main tool for fighting climate change. Ahead of the European Parliament’s vote, a group of 36 global NGOs, including chapters of Friends of the Earth, Corporate Europe Observatory and FERN, the European forests campaign group, released a report calling for the ETS to be scrapped. “The vote on backloading is the wrong debate,” said Hannah Mowat of FERN. “No amount of structural tinkering will get away from the fact that the EU has chosen the wrong tool to reduce emissions in Europe.” The report says that rather than wasting time and energy fixing a broken system, the EU should instead shift to more direct policies for stimulating changes that lower emissions, such as feed-in tariffs for renewables, redirecting public subsidies away from the fossil-fuel industry and towards low-carbon infrastructure, and improving energy efficiency. Such a change of approach would not be straightforward. The ETS is now almost ten years old. For the past decade, the EU’s climate policy has been constructed with the ETS at its core. “I don’t see how [scrapping the ETS] would offer immediate solutions,” said Sam Van Den Plas of campaign group WWF. “That’s a process that would require many more years.” “Despite the disappointing news on backloading, ETS is still a directive in place,” he added. “It’s still a useful policy framework, but the parameters are incorrect. The real debate still lies in the structural changes [to be proposed by the Commission], regardless of whether backloading goes ahead or not.” But the backloading debate has left environmental campaigners in the awkward position of defending a market mechanism they were never keen on from the outset, while the centre-right politicians who devised the system are now silent as it crumbles. Angela Merkel, Germany’s chancellor, was a main proponent of emissions trading, but now she refuses to take a position on backloading. Barroso was also a champion, but has not come out with a statement on ETS since the Parliament’s vote. German centre-left MEP Matthias Groote, chairman of the Parliament’s environment committee, has criticised him for this silence. Quiet support Ville Niinistö, Finland’s environment minister, says that there is still support for the ETS as the main vehicle for emissions reduction, particularly because the alternative at this point would probably be 27 different national climate policies. The UK’s recent unilateral climate action, for instance, seems to be a troubling sign of things to come. But he says that the current sense of crisis around the ETS is alerting political and business leaders to the need for change if the ETS is to be relevant in the future. “There is still momentum behind making sure that the ETS works, but this is a good reminder that NGOs were right when they said that you cannot have a market-based mechanism and then make it too loose, because then there is no market,” Niinistö said. “The ETS is a big part of the European approach, and we should not leave it easily,” he said. “But we have a lot to prove – that this market mechanism works. European companies have a lot to prove – that they want this market mechanism to work. There seems to be quite a lot of discussion within the business world in Europe at this moment, that if they want the ETS to work they should be supportive of making sure it is the main vehicle for emissions reductions.” If no solution to the ETS crisis of confidence is found in the coming months, there could be big implications worldwide for other countries that are copying the EU system – the first and largest carbon market in the world. Australia’s system is set to begin trading in 2015 and has plans to link to the EU ETS. China is launching ETS pilot schemes and California has a fully functioning market. A collapse of the ETS might lead these countries to rethink their plans. Taylor Scott International