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The EU Emissions Trading Scheme has failed: “Time to scrap the ETS”

The EU Emissions Trading Scheme has failed: Time to scrap the ETS“No amount of structural tinkering will get away from the fact that the EU has chosen the wrong tool to reduce emissions in Europe. It is inherently too weak to get the EU to where it needs to be in the necessary timescale,” says Hannah Mowat from FERN. “The EU can no longer wait for the market to deliver.”

Mowat’s comment comes on the release of a report exposing the Myths of EU Emissions Trading Scheme. A press release about the report is posted below, and the report, “EU ETS myth busting: Why it can’t be reformed and shouldn’t be replicated”, can be downloaded here (pdf file, 1.3 MB). The report is published by several of the organisations that signed on to the “Time to scrap the ETS” declaration. So far, more than 130 organisations have signed the declaration – if your organisation wants to sign on, please send an email to

Meanwhile, Climaxi is holding a Greenwash Circus in Gent on 20 April 2013. The EU ETS is currently in first place (by five votes). Place your vote here.

In February 2013, the European Parliament’s Environment Committee voted in favour of postponing (or backloading) the auctioning of 900 million pollution allowances. The allowances will be auctioned instead in 2019-2020. Although the aim of the proposal is to increase the price of carbon in the ETS, the market’s reaction to the February vote was a 20% slump in the price of EU allowances. Today, the European Parliament in Strasbourg will vote on whether the backloading proposal should be implemented.

Not all NGOs are opposed to either the backloading proposal or to the EU ETS. Yesterday, Greenpeace, Climate Action Network Europe and WWF put out a statement supporting the backloading proposal. But as Dave Keating writes on these NGOs are in an “awkward position”:

In every statement they put out regarding the vote they are at pains to point out that in itself, the backloading proposal is not nearly enough to save the ETS. On this all sides agree, even the Commission. The measure, put forward in July, was intended as a short-term fix that would go at least a little way toward restoring confidence in the ETS while a long-term solution was developed.

Several energy corporations also support the backloading proposal, including Shell, EDF, EnBW, Eon, Energie-Nederland, GE, and Statoil. They are joined by the Climate Markets and Invesment Association, Climate Change Capital, ClimateCare, The Carbon Neutral Company, and The Climate Group. In an advert in today’s Financial Times, 39 companies, with a total turnover of about €800 billion, write,

The current carbon price (circa €4/t) will not stimulate low-carbon investments or innovation. Without agreement on the backloading proposal the price will fall further thus threatening the long term survival of the ETS.

The ETS myths report highlights five myths associated with the EU’s carbon trading scheme:

Myth 1: “The EU ETS is the best tool for reducing emissions.”
Reality: Emissions rose in Phase I (2005–2007). In Phase II (2008–2012) decreases in emissions were not linked to EU ETS but rather to the economic crisis.

Myth 2: “The EU ETS acts as a major driver of investment in clean technologies and low-carbon solutions.”
Reality: Phases I & II of the EU ETS have not triggered transformational investment in sustainable renewable energy or low-carbon technology.

Myth 3: “The EU ETS is a system that is functioning as intended, and it is flexible.”
Reality: The EU ETS is a cumbersome, unresponsive mechanism which has failed to achieve its own objectives.

Myth 4: “The EU ETS is delivering cost-effective emissions reductions.”
Reality: The EU ETS has not been cost-effective for either the public or consumer purse.

Myth 5: “The positive thing is that the ETS is working.”
Reality: The EU ETS is a Fraudsters’ Paradise, fostering tax evasion, fraud, and other criminal activities.

Instead of pushing these myths and trying to “fix” the ETS, the report argues that the EU needs to apply “policy instruments that have been show to work, such as feed-in tariffs, redirecting public subsidies away from the fossil-fuel industry and towards low-carbon infrastructure, reducing consumption of energy, and improving energy efficiency”.

NGO report busts the myths of the Emissions Trading Scheme
Why it must be replaced with direct action to reduce greenhouse gas emissions

Brussels, April 15th– The European Parliament votes tomorrow on the European Commission’s proposal to backload 900 million emissions permits within the EU Emissions Trading Scheme (EU ETS). This vote assumes the EU ETS can be reformed, but ahead of the vote, a new report shows that the problems of the EU ETS are systemic and unresolvable. Keeping this failed system in place would further delay real action to reduce emissions in Europe.

The report “EU ETS myth busting: why it can’t be reformed and shouldn’t be replicated”, has been published by several signatory organisations[1] from the “Time to scrap the ETS” declaration. It looks at a number of claims made in defence of the EU ETS and shows why they are not valid.

A key myth is that is that the EU ETS has reduced greenhouse gas emissions. The slight decrease in emissions from 2008 and 2010 was in fact related to the economic crisis. There has been no real shift in the way energy is produced or used by industry. The EU ETS is incapable of triggering the transformation and regulatory actions necessary for a sustainable and just path that could be achieved through clear direct policies, explains the report.

“The vote on backloading is the wrong debate. No amount of structural tinkering will get away from the fact that the EU has chosen the wrong tool to reduce emissions in Europe. It is inherently too weak to get the EU to where it needs to be in the necessary timescale. To achieve its goal of keeping the increase in global warming within two degrees centigrade, itself totally inadequate, the EU can no longer wait for the market to deliver,” says Hannah Mowat from FERN.

Another myth busted in the report is that the EU ETS is a flexible and cost-effective tool to reduce emissions. “The question is, cost effective for whom? Businesses have managed to make windfall profits by passing costs onto consumers from permits to pollute which they got free of charge. In Phase I and II this was put down to market teething problems, but seven years on, these issues remain and are getting worse”, states Belén Balanyá, from Corporate Europe Observatory.

The report also pulls to pieces the idea of the EU ETS as an incentive to promote investment in cleaner energy solutions. It states that due to the massive over-allocation of permits, businesses have ensured that polluting has continued to be the cheapest option, and therefore, no noticeable investments were made in clean technologies or low-carbon solutions as a result of the ETS.

“The EU must acknowledge that the ETS experiment has not worked. Trying to fix this scheme will in fact close the door to effective and fair climate policies. We need to replace it with real action that will bring about a just transition away from fossil fuel dependence and that leaves future generations with a fair chance of avoiding uncontrollable climate change”, says Lyda Fernanda, from Transnational Institute.

For more information contact:
– Hannah Mowat (FERN): +32 48 50 25 432
– Lyda Fernanda (TNI): +31 685086340
– Belén Balanyá (CEO): +31 633090386

[1] Alianca Redes de Cooperacao Comunitaria Sem Fronteiros Asociacion Ambiente y Sociedad, (Colombia), All India Forum of Forest Movements – AIFFM (India), ATALC – Amigos de la Tierra América Latina y Caribe, Both ENDS (Netherlands), Carbon Trade Watch, CENSAT Agua Viva – Amigos de la Tierra Colombia, Centre for Civil Society (South Africa), COECOCEIBA – Amigos de la Tierra Costa Rica, Attac France, Corner House, Corporate Europe Observatory, CounterBalance, Earth Peoples, Ecologistas en Acción (Spain), FERN, Food and Water Watch Europe, Friends of Siberian Forests (Russia), FASE, Friends of the Earth Brazil, Friends of the Earth Canada, Global Forest Coalition, Green Cross Society, Indian Social Action Forum (India), JA!Justica Ambiental – Friends of the Earth Mozambique, Maryknoll Office for Global Concerns, Movimento Mulheres pela P@Z!, NESPON (India), New York Climate Action Group, Observatori del Deute en la Globalitzacio (Catalunya), Philippine Rural Reconstruction Movement, PIDHDD, Re:Common, REDES – Friends of the Earth Uruguay, SDE, School of Democratic Economics, Taller Ecologista, Timberwatch (South Africa), TNI, UKWIN, WISE, Woodland League, World Development Movement


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