The European Commission plans to hand out more free emission allowances than before. The decision comes after pressure from major member states and industry - and means companies will be allowed to emit more CO2 at no cost.
the EU Emissions Trading Scheme, EU Emissions Trading System (ETS), has long been described as one of the world's most comprehensive climate tools. But now internal documents published by Euractiv show that the European Commission is planning to increase the amount of free allowances to industry, reports Euractiv.
More free emissions after pressure
This is due to demands from Germany and Italy, among others, to relax the rules for industry. Previous proposals risked significantly reducing free allocations for the chemical and paper industries between 2026 and 2030.
To “address industry concerns”, the EU is now changing its model. According to the document, indirect emissions will also be included - opening the way for more free allowances.
The change is expected to result in the equivalent of around €4 billion in additional free allocations.
– It is good that the Commission is using all possibilities to provide more free certificates, says Peter Liese.
The system is questioned
The ETS is based on companies having to buy allowances for their emissions, but at the same time has long contained exemptions where industry received a large share for free - provided that efficiency is improved.
However, the latest update of the regulatory framework, the so-called benchmarks, has met with resistance. In particular, requirements linked to Nordic biofuel plants have been identified as difficult to achieve for industries in other parts of the EU.
In parallel with the EU's change of course, a Swedish report has shown that Sweden's emissions, when weighed against the uptake in forests and land, are at a negative level. Forests play a central role by sequestering carbon dioxide from the atmosphere and storing it in biomass.
Research also shows that carbon dioxide is a prerequisite for plant growth, as plants use the gas in photosynthesis to grow. Increased carbon dioxide availability can in some cases contribute to increased growth, which affects how uptake in forests is calculated.
A new proposal is now expected to be presented in early June.
New balance between climate goals and industry
The decision highlights a recurring issue in EU climate policy: how far regulations should go before affecting industry's competitiveness.
With this new announcement, the European Commission is signaling a change of course - whereby industry considerations will carry more weight in the design of climate rules. At the same time, it raises questions about how to balance emissions and removals, especially in countries where natural carbon sinks already affect the overall climate picture.
The growing question is how the change will affect the EU's climate goals - and what role free emission allowances will play in the future.
The EU is digging its economic grave with this eternal nonsense about the allegedly harmful carbon dioxide which, on the contrary, is absolutely essential for our survival on the planet.
Politicians are sitting on two chairs and have given themselves an impossible task. If Transition looks like it is having an effect, they will be scared shitless and want to slip out the back door. This is populism, and in the end, the most convenient and seemingly profitable option in the short term wins. It is extremely tragic and perhaps that is why the Transition is failing.
It is precisely the situation when the market price mechanisms do not spontaneously work that politics must step in to impose laws, or introduce taxes that modify the market, to take society over a period of difficulty.
According to recognized scientific knowledge, the climate problem is real. Ignoring the issue politically and economically is tempting in the short term. But in the long run, it is very likely to be devastating. Something can still be done, but difficulties cannot be avoided. It is precisely in times like these that political leadership is needed to intervene where the market fails.