By Andrea Salimbeni, EUMANS Board Member
On Wednesday 8 June, the European Parliament rejected a proposal, presented by the European Commission in July 2021, to upgrade the ETS, the European existing carbon pricing system. More in detail, the MEPs rejected the final report on the expansion and revision of the Emissions Trading System, a key part of the European Commission's Fit for 55 climate legislation package.
The rejection led to the postponement of three key reforming actions, strongly requested also by the European Citizens Initiative StopGlobalWarming.eu - A price on carbon to fight climate change led by EUMANS in 2020/2021:
- the introduction of the carbon border adjustment mechanism (CBAM), that would impose costs on foreign imports of electricity, iron and steel, fertilisers, aluminium and cement, avoiding the risk of carbon leakage;
- The reduction of free allowances, which now enable many industry sectors (like steel, cement, etc.) to avoid the purchase of allowance and, thus, the payment for their CO2 emissions
- the establishment of a “social climate fund”, which aimed to shield poorer households from the cost of energy efficiency improvements
In one shot, the EU parliament rejected the proposal of the European Commission, prolonging the availability of free CO2 permits (free allowances) to key industry sectors, and delaying the entry in force of the carbon border adjustment mechanism (CBAM) - the new levy on imports of carbon. If no further action will be taken, with this decision the EU Parliament delayed the green transition of 15 years, in contradiction not only with the ambitious targets set in the “fit for 55 package”, but also with the role of the European Union as a leading entity able to drive the United Nations towards a new sustainable economic model.
THE "CAUTIONARY APPROACH" OF INDUSTRIAL ACTORS
In its proposal of July 2021, the EU commission highlighted the importance of an increase of the auction share and the corresponding further reduction of the free allowances share, which could be only conceivable if the Carbon Border Adjustment Mechanism would effectively protect the industry sectors concerned (steel, cement, etc..) and avoid carbon leakage, without breaking the international law. With CBAM, free allocation for these sectors could be gradually phased out.
On the contrary, the position of the lobbying associations was clear: the border carbon adjustment tax would further hike prices of imported products, which have already greatly soared in recent months due to Ukraine conflict and covid pandemic.
Despite the Ukraine conflict and the global energy crisis have shown the weaknesses and threats of an economic system based on extractive resources, on the 8th of June, the EU Parliament decided to follow the lobbysts and refused to speed up the sustainable transition. Again, the institutions followed the cautionary approach of big industrial actors, afraid about changing the present economic system. The great mistake was to consider the recent energy and raw materials crisis a good reason to temporarily set aside the global warming emergency. There is a common solution to stop global warming, and to avoid worsening economic and energy crises.
AN OPPORTUNITY TO TAKE
For years the EU has financed dictatorships by through commercial agreements for fossil fuels purchase. But, until our economy will continue to be based on energy sources imported from non-EU, often non-democratic countries, interstate conflicts will continue to happen, as consequences of a global, unbalanced economic system based on extractive resources. For that, the EU parliament approach is not only dangerous for climate, but also for future peaceful relationships between countries.
The governments are demonstrating again their inability to agree on common decisions, and their lack of interest in changing the paradigm, however, it must be recognized that global warming is the sole, common emergency in place in all world nations. The introduction on global measures to reduce fossil fuels consumption, avoid intensive extraction of minerals can represent a great opportunity for a peace, and this opportunity is represented by the widespread, global application of carbon pricing.
Europe, where ETS, the world largest Carbon pricing system is in force, has the responsibility of driving united nations towards a global carbon pricing. Last year, at COP 26, during the parallel session on carbon pricing, Mr. Timmermans announced the intention to integrate the EU ETS system with a Carbon Border Adjustment Mechanism (CBAM). This mechanism could contribute to convince other non-EU countries to take comparable measures to decarbonize their economy, towards a global agreement on carbon pricing.
GLOBAL CARBON PRICING: A CALL TO ACTION
Now, this decision could represent the great failure of the European Union as driving force towards the sustainable transition. It is for this reason that EUMANS launched the appeal for a global carbon pricing. Each EU member state is now called to act and to ask to the United Nations, during the next COP 27, a clear engagement towards the establishment of a global carbon pricing within 2030.
A global carbon pricing system will be not only a space across the planet where all countries engage to decarbonize their economy, but also a paradigm shift for the global energy market. Hopefully, when sustainability will have a real economic value, the price of energy sources will be equalized, energy affordability and availability will be more equally distributed among countries, and we won’t be dependent of low-cost energy sources extracted thanks to disregard of human rights. Then, hopefully, nations would have one reason less to make war.