The Council’s position and the deal struck by the European Parliament further weakend the already insufficient Commission’s proposal on EU’s 2040 climate target, says Fabiola De Simone from Carbon Market Watch. The organization sharply criticizes international carbon credits as well as delaying ETS2 system which may endanger vulnerable households and companies.
What is the Carbon Market Watch’s opinion on the recently defined position of the Council and Parliament regarding the EU’s 2040 Climate Target?
Our expectations for the EU’s 2040 climate targets (reduction of greenhouse gas emissions by 90 per cent compared to 1990 levels) were actually pretty low. The original Commission’s proposal contained a wishlist of so-called flexibilities with the most damaging being the inclusion of international carbon credits. More reasonably, we should call it loopholes. Rather than improving the already weak Commission’s proposal, which was presented without a proper impact assessment, the joint position of member states (adopted by the Council) and the deal struck by the European parliament have made things even worse.
You really do not see anything positive in this respect?
You might be interested
The Parliament at least added much-needed safeguards on the quality of international credits and clarified that international credits need to stay out of the EU’s carbon market. However, that is not enough, of course. If the current deal on the table becomes reality, it would constitute enormous steps backwards for climate action compared to what is required.
You credited the European Parliament for having outlined at least some necessary principles on the quality of international credits. Which ones?
Let us speak about starting point for far more detailed criteria that must ultimately be developed. These principles require that any international credit must come from credible and transformative mitigation activities in countries with Paris Agreement compatible targets and policies. It should have high environmental integrity, by being permanent, and not double counted.
The international credits also must have economic, social and environmental benefits and human rights safeguards. They are intended to contribute to climate adaptation funding and lead to an overall global net-emission.
That may not sound wrong. But in principle, you are still critical towards this kind of environmental outsourcing, is that right?
Let us have a look how it all has developed. Environment ministers and the Parliament agreed on an 85 per cent emissions reduction target to be achieved domestically. So it becomes a binding 90 per cent only by relying on problematic international credits.
This is considerably lower than the 90 to 95 per cent domestic range without flexibilities by 2040 which has been recommended by the EU’s official scientific advisors. it is also lower than the potential 87 per cent reduction suggested by the Commission in its proposal in July.
The EU should not count on emissions reductions achieved by other countries, highly likely in the Global South, to do what it can and should do at home. The texts approved by both the Council and the Parliament include a possibility of relying on a lower quantity of international credits if needed. What also may happen is there will not be enough high-quality credits available—that is a very realistic possibility.
How do you view postponing of the introduction of Emissions Trading System for road transport and buildings (ETS2)?
Backpedalling on the ETS2 became a bargaining chip in the 2040 EU climate target discussions. The legislators claim that a delay would ensure a smooth start of the ETS2. In reality, however, a delay rather counteracts a smooth and fair transition. Policymakers say they are worried about high ETS2 prices, but that is a totally wrong way of thinking.
The introduction of ETS2, however, will in reality ignite consumer prices rise–fuel, heating…
That is correct, yes, it is all also about money. But the other way around. By delaying ETS2 by one year (now starting in 2028) the EU risks losing around €50bn in auctioning revenue. That imperils the size of the Social Climate Fund (EU fund intended to support vulnerable people and small businesses who are most affected by rising energy and transport costs as Europe moves towards climate neutrality). Thus it risks hampering climate investments and support for vulnerable households.
A fair and effective ETS2 also requires complementary policies. It is key that the bans on internal combustion engine vehicles and fossil fuel boilers are implemented. No space should be left for expensive and risky fuels in road transport and the buildings sector. The limited supply of sustainable fuels must be used only in sectors that have no obvious path to full electrification.
Fabiola De Simone is Policy Lead on Carbon Removals and Coordinator of the 2040 Target Process in Carbon Market Watch.
