In emissions trading, parts of industry or electricity producers have to pay for the emission of gases that are harmful to the climate.
(Photo: dpa)
Brussels The reform of European emissions trading has failed for the time being. In months of negotiations, the members of the European Parliament could not agree on a compromise. The proposed proposal was initially weakened by Parliament on Wednesday with the votes of the Conservatives. As a result, the Social Democrats and the Greens withdrew their consent and allowed the law to fail.
Now the environment committee has to negotiate a new proposal. The mood there is now poisoned. Rapporteur Peter Liese (CDU) accused his colleagues of behaving “indecently”. His opponent Michael Bloss (Greens) said the Conservatives had “hopefully learned their lesson”.
Both sides accused themselves of relying on the voices of right-wing extremists. Without them, the Conservatives’ amendments would not have had a majority, and the far-right voted in the same way as the Progressives in rejecting the entire package.
Emissions trading is the most powerful instrument in the twelve laws of climate protection “Fit for 55” proposed by the EU Commission a year ago. The main point of contention is the question of when companies should pay for every ton of CO2 they emit.
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So far, some of the corresponding certificates have been distributed to the energy-intensive industry free of charge. That should be the end of it. The original proposal envisaged phasing out the free allocations from 2026 to 2036. One side of Parliament wanted to do this in order to speed up the restructuring of industry, the other side wanted to proceed more slowly.
Complex consequences of failure
The Conservatives had suggested tightening emissions trading elsewhere: they want to achieve a 63 percent reduction in emissions by 2030, the Commission had only proposed 61 percent. Greens and Social Democrats wanted to go further and had demanded 67 percent.
The environment committee finally agreed on a comparatively ambitious reform. That is why the Conservatives tried to weaken this compromise again in the plenary session, but did not have a majority to do so.
It is unclear how long the negotiations will continue. The committee chairman Pascal Canfin (Liberals) spoke of an “unexpected situation”. Other MEPs are assuming a few weeks of negotiation time. At the end of the month, the Council of Member States actually wanted to define its position. After that, the final negotiations could have started.
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The matter is particularly complex because there are other laws associated with emissions trading that could not be voted on now: There should be a climate social fund that uses the funds from emissions trading to subsidize insulation on houses and heat pumps.
In addition, a new CO2 border adjustment is planned, through which importers of energy-intensive goods will be asked to pay. This is intended to protect European companies from cheap competition if they have to pay significantly more for emissions trading. The levy is to be introduced at the same time as the free allocations expire. In Brussels jargon one speaks of “Cbam”, which stands for “Carbon Border Adjustment Mechanism”.
Export problem for the economy
The economy warns urgently against the changeover and considers the project to be a half-baked idea that will not work. On the one hand, Cbam can trigger trade conflicts if other countries do not want to accept the additional tariff. It is foreseeable that the court of the World Trade Organization WTO will have to deal with this.
On the other hand, there is no solution to the industry’s export problem: It will hardly be possible to sell expensive European products abroad. The WTO expressly prohibits subsidies for this. The German chemical industry, for example, exports goods worth 58 billion euros to non-EU countries every year and fears for its competitiveness.
“If certificate prices continue to rise like this, the whole system will blow up in our faces. Then we no longer need to compete with other regions of the world,” says Wolfgang Große Entrup, General Manager of the German Chemical Industry Association.
The steel industry also says that the additional costs make the transformation more difficult. The industry must invest in new direct reduction plants that can be operated with hydrogen, but fears additional costs of 16 billion euros by 2030 as a result of the emissions trading reform.
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