Work
04.October 2005 - 00:00
Suspension of emissions trading
Now that EU Directive 2003/87/EC(1) on emissions trading has been in force for over half a year, the plentiful feedback from its operators does indicate that emissions trading is effective as a check on greenhouse gases The feedback suggests that the EU's emissions trading system is disturbing the energy market and national climate strategies and unnecessarily increasing the price of electricity. The price rise is particularly serious as regards the competitiveness of the EU’s energy-intensive industry. In Central Europe the industrial customer pays an extra 10 %, 20 % or more for his electricity as a result of emissions trading. In Finland, for example, the energy tax and energy subsidy system, together with emissions trading, creates a system which turns the biofuel market and the market for wood as a raw material into polluters. Emissions trading has increased the price of wood for fuel to such an extent that the burning of wood is more profitable than the manufacture of more highly-processed products by the forestry industries proper.
Because of the excessively tight preparation timetable, not all the EU countries have had time to put their emissions trading systems in place by the beginning of 2005. The registers relating to trading are still incomplete in a large number of Member States. Distribution plans have been drawn up in different ways and on different schedules, creating difficulties with comparability.
It is also possible to criticise the legality of the distribution of emission rights. The countries’ starting levels have not been sufficiently taken into account, and those who have been taking care of energy efficiency are forced to restrict other improvement activities in purchasing emissions rights. Accordingly, those who have exercised proper management in the past are paying twice for cleaning-up activities: once for their own and now, through emissions trading, for those of others.
Our energy-intensive industry has had additional costs as a result of emissions trading, which are causing production and investment to leave the EU and at the same time are threatening the competitiveness of our industry. By means of the emissions trading system the EU is unilaterally worsening its own security of energy supply and making itself dependent on natural gas from Russia and North Africa. Indeed, it is justifiable to state that Europe is practising an emissions trading system which has more to do with structural policy than with checking the emission of greenhouse gases. So it is excessive for the EU to bind itself for as much as eight years to an emissions system which has been only recently put into practice.
Does the Council still consider that the directive meets the objectives set for it at the outset? Is there not a need for a temporary freeze (suspension) of emissions trading so that the worst distortions of the system which has now developed can be corrected?
(1) OJ L 275, 25.10.2003, p. 32.
Answer given by the Council
E-3443/05
Reply
(9 March 2006)
The EU Emissions Trading Scheme (ETS) is a cornerstone of the fight against climate change. It is the first international trading system for CO2 emissions in the world and it covers some 12 000 installations representing close to half of Europe's emissions of CO2. The aim is to help EU Member States achieve compliance with their commitments under the Kyoto Protocol. Emissions trading is the most cost-effective measure to achieve the Kyoto targets.
The Council is aware of the difficulties encountered in the course of the pilot phase of the functioning of the ETS. After a first trading period, the implementation of the EU ETS has provided valuable lessons that should be reflected in the future development of the scheme. In the light of initial experiences, Directive 2003/87/EC provides for a comprehensive review in 2006 which will permit exploration of means of tackling particular issues and adjustments to the instrument, preferably in time for the second phase of the scheme.
At this stage, it is too early to make final considerations on the merits and impacts of the functioning of the scheme. At the Environment Council on 17 October 2005, the Council noted that the EU ETS would remain an essential instrument in the EU's medium and long term strategy to tackle climate change.
Now that EU Directive 2003/87/EC(1) on emissions trading has been in force for over half a year, the plentiful feedback from its operators does indicate that emissions trading is effective as a check on greenhouse gases The feedback suggests that the EU's emissions trading system is disturbing the energy market and national climate strategies and unnecessarily increasing the price of electricity. The price rise is particularly serious as regards the competitiveness of the EU’s energy-intensive industry. In Central Europe the industrial customer pays an extra 10 %, 20 % or more for his electricity as a result of emissions trading. In Finland, for example, the energy tax and energy subsidy system, together with emissions trading, creates a system which turns the biofuel market and the market for wood as a raw material into polluters. Emissions trading has increased the price of wood for fuel to such an extent that the burning of wood is more profitable than the manufacture of more highly-processed products by the forestry industries proper.
Because of the excessively tight preparation timetable, not all the EU countries have had time to put their emissions trading systems in place by the beginning of 2005. The registers relating to trading are still incomplete in a large number of Member States. Distribution plans have been drawn up in different ways and on different schedules, creating difficulties with comparability.
It is also possible to criticise the legality of the distribution of emission rights. The countries’ starting levels have not been sufficiently taken into account, and those who have been taking care of energy efficiency are forced to restrict other improvement activities in purchasing emissions rights. Accordingly, those who have exercised proper management in the past are paying twice for cleaning-up activities: once for their own and now, through emissions trading, for those of others.
Our energy-intensive industry has had additional costs as a result of emissions trading, which are causing production and investment to leave the EU and at the same time are threatening the competitiveness of our industry. By means of the emissions trading system the EU is unilaterally worsening its own security of energy supply and making itself dependent on natural gas from Russia and North Africa. Indeed, it is justifiable to state that Europe is practising an emissions trading system which has more to do with structural policy than with checking the emission of greenhouse gases. So it is excessive for the EU to bind itself for as much as eight years to an emissions system which has been only recently put into practice.
Does the Council still consider that the directive meets the objectives set for it at the outset? Is there not a need for a temporary freeze (suspension) of emissions trading so that the worst distortions of the system which has now developed can be corrected?
(1) OJ L 275, 25.10.2003, p. 32.
Answer given by the Council
E-3443/05
Reply
(9 March 2006)
The EU Emissions Trading Scheme (ETS) is a cornerstone of the fight against climate change. It is the first international trading system for CO2 emissions in the world and it covers some 12 000 installations representing close to half of Europe's emissions of CO2. The aim is to help EU Member States achieve compliance with their commitments under the Kyoto Protocol. Emissions trading is the most cost-effective measure to achieve the Kyoto targets.
The Council is aware of the difficulties encountered in the course of the pilot phase of the functioning of the ETS. After a first trading period, the implementation of the EU ETS has provided valuable lessons that should be reflected in the future development of the scheme. In the light of initial experiences, Directive 2003/87/EC provides for a comprehensive review in 2006 which will permit exploration of means of tackling particular issues and adjustments to the instrument, preferably in time for the second phase of the scheme.
At this stage, it is too early to make final considerations on the merits and impacts of the functioning of the scheme. At the Environment Council on 17 October 2005, the Council noted that the EU ETS would remain an essential instrument in the EU's medium and long term strategy to tackle climate change.