A letter to the Environment Ministers of the Council of the European Union was co-signed by the Green Tank, along with Carbon Market Watch, AirClim, Bond Beter Leefmilieu, Polish Green Network, WISE and ZERO.
In particular, the organizations urged the Ministers of the Member States to endorse the “polluter pays” principle and the swift abolition of free emission allowances, during the process of revising the relevant Directive on the Emissions Trading System (ETS). Despite the fact that the cornerstone of the Directive is the auction of emissions, the System has not functioned uniformly, as energy-intensive industries have reduced their emissions verylittle and the majority of their emissions are covered by free allowances.
In fact, free emissions allowances are a failure of the ETS market and are slowing down the decarbonization, as companies have no incentive to change their production processes and reduce their emissions, transitioning to greener models. However, apart from the apparent environmental costs, the practice of free allowances is also financially detrimental to Member States. This is because through free allowances they lose revenue, which could be channeled into climate action and clean technologies. Their abolition can thus boost the green innovation and entrepreneurship of the Member States and the EU itself.
The revision of the ETS Directive is therefore an opportunity to improve the ETS, which should not be missed. Instead, it must give impetus for a regulatory framework that contributes to greenhouse gas emissions reductions and is thus in line with the international climate targets of the Paris Agreement and the European Green Deal.
The letter was sent on the occasion of the upcoming meeting of the Council of Environment Ministers on December 20, 2021.
You can read the full joint letter sent to the Ministers before their meeting here.