EU Parliament Passes ETS Reform Draft

20.02.2017 -

By a vote of 379 to 263 with 57 abstentions, the plenary session of the European Parliament on Feb. 15 adopted draft legislation for revising the Emission Trading Directive (ETS). The vote came after criticism of the Parliament’s perceived foot dragging on a reform that would reflect the EU’s commitment to meeting its goals under the Paris climate agreement. These call for a 40% reduction of greenhouse gas emissions by 40% up to 2030, compared with 1990 and make a renewable energy share of 27% of energy use.

Targets for overhauling the emissions trading scheme (ETS) will be discussed further at a meeting of the EU Council of Members on Feb. 28 and later in so-called “trilogue” negotiations between the EP, the European Commission and the Council.

The plan is to gradually reduce the number of CO2 emissions allowances to make them more expensive and thus provide an incentive for industries to adopt cleaner technologies. The EP’s Environment Committee had favored sharper cuts in allowances. At the same time, the Parliament left concessions for energy-intensive industries such as chemicals in place.

Commenting on the vote, Marco Mensink, director general of the European Chemistry Council, CEFIC, said, “in the end, Parliament made progress in improving the Commission’s proposal. Member states need to find a way to safeguard jobs in all exposed industries and free up reserves for investment and innovation in Europe, for economic recovery and growth.”

Germany’s chemical industry association Verband der Chemischen Industrie (VCI) said the EP’s decision will drive up the allowance costs for companies. It is “crucial” for the chemical industry to receive sufficient amounts of free allowances – especially taking into account that international competitors outside the EU do not have comparable costs –  VCI said, adding that will press for amendments to the ETS scheme.

From a different perspective, Wendell Trio, director of Climate Action Network Europe, said it was “shocking that the Parliament chose to bow to the interests of polluting industries instead of protecting citizens from a catastrophic climate breakdown.” Calling on “progressive EU governments” to finally turn the ETS into a functioning tool, he said the reform as passed “will keep the carbon market ineffective for a decade or more.”

Marc-Olivier Herman, Oxfam’s EU policy adviser, called the vote “a missed opportunity for the climate and for those hardest hit by global warming,” noting also that “no share of the revenues from the EU emissions trading scheme was allocated to help poor countries adapt to the devastating impacts of climate change.” The Parliament and the Council must address these flaws when they decide on the final text of the legislation, he said.