Time for the EU to scrap it's Emissions Trading System

[mark at tlio.org.uk]

Time to Scrap the ETS declaration

This declaration is for signatures of organizations/groups/networks, 
not individuals! If your 'Group' wishes to sign the declaration, then 
please send an email to: scrap.the.ets at gmail.com


18 February 2013

‘It is time the EU scraps its carbon Emissions Trading System’
  
A growing group of civil society organisations[i] is calling on the EU 
to abolish its Emission Trading System (ETS) to open space for truly 
effective climate policies. Today they release a joint declaration 
that highlights the many structural loopholes the ETS is facing, that 
the proposed reform proposals put forward by EU policy makers will not 
be able to fix.
  
Tomorrow (19 Feb.) the Environmental Committee of the European 
Parliament will vote on the Commission’s backloading proposal.[ii] 
“Although advertised as a way to fix the failing ETS, it is nothing 
but a drop in the ocean. The EU's flagship policy to address climate 
change has diverted attention from the need to transform the system’s 
dependency on fossil fuels and growing consumption, resulting in 
increased emissions. After seven lost years, it’s time to make space 
for effective and fair climate policies,” says Joanna Cabello, from 
Carbon Trade Watch.
  
More than 90 organisations, networks and movements from all over the 
world launch today the joint declaration 'It is Time to Scrap the 
ETS'.[iii] It lists the structural flaws of the ETS and the risks of 
trying to fix it.
  
One of the flaws is the use of offset projects which allows companies 
or governments from the North to buy credits from a project in the 
South instead of reducing emissions at source. “The offset projects 
under the Clean Development Mechanism (CDM), the biggest offset 
scheme, has actually increased emissions while causing land grabs and 
human rights violations, community displacements, conflicts and 
increased local environmental destruction,” says Isaac Rojas, from 
Friends of the Earth Latin America and Caribbean (ATALC). “Other new 
market mechanisms and related financial products (such as forest 
carbon offsets and biodiversity offsets) follow the same logic which 
allows, and offsets, deforestation, forest degradation, biodiversity 
loss and water pollution,” he adds. In spite of the growing evidence 
of the problems, offset use in the ETS grew by 85% in 2011.
  
Furthermore, the EU ETS is costing the public a lot of money without 
serving a public purpose. Belen Balanyá, from Corporate Europe 
Observatory says: “At a time when EU citizens are shouldering the cost 
of the economic crisis, they are also being forced to bear the cost of 
the legislation, regulation and much of the quantification of 
emissions that carbon markets require, as well as the costs of 
measures against fraud, theft, corruption, and tax evasion. Meanwhile 
big polluters such as Arcellor Mittal and Lafarge make millions of 
windfall profits with over allocated permits.”
  
The EU ETS created the biggest carbon market in the world and now 
serves as a model for other countries. China is setting up a system 
with EU support and is planning to link it to the EU ETS. Other 
countries and regions such as Brazil, Korea, Australia, California in 
the US and Quebec in Canada have similar plans. The failures of the 
ETS will also be exported to other areas, as it will be used as a 
model for trading other ‘ecosystem services’ such as forests, 
biodiversity, water, soils and landscapes. In the meantime, civil 
society groups from around the world are demanding to scrap the ETS so 
that market mechanisms stop being used as a model for environmental 
protection.
  
The organisations supporting this declaration conclude: “It is time to 
stop fixating on ‘price’ as a driver for change. We need to scrap the 
ETS and implement effective and fair climate policies by making the 
necessary transition away from fossil fuel dependency.”
  
For more information contact:
  
- Joanna Cabello (Carbon Trade Watch): + 32 493829459
- Belén Balanyá (Corporate Europe Observatory):  +31 6 33090386
- Isaac Rojas (Friends of the Earth Latin America and Caribbean): in 
Costa Rica +506 83383204, in Uruguay +59899621591
  

[i]
             As of February 17th, 92 groups signed on to the common 
declaration ‘It is Time to Scrap the ETS’ 
http://scrap-the-euets.makenoise.org/about/. Signatories are: AITEC – 
Association Internationale de Techniciens, Experts et Chercheurs 
(France), ANPED – Northern Alliance for Sustainability, ATTAC 
(Austria), ATTAC (France), Banktrack, Beyond Copenhagen Collective 
(India), Biofuelwatch (UK), Biofuelwatch (US), Both ENDS (The 
Netherlands), BROC – Bureau for Regional Outreach Campaigns (Russia), 
Carbon Trade Watch, Censat Agua Viva / Friends of the Earth 
(Colombia), Centre for Civil Society (South Africa), Center for 
Environment (Bosnia and Herzegovina), Centre For Environmental Justice 
/ Friends of the Earth (Sri Lanka), CESTA / Friends of the Earth (El 
Salvador), Climate & Capitalism (Canada), Climate Justice Collective 
(UK), COECOCEIBA / Friends of the Earth (Costa Rica), Confédération 
Paysanne (France), Cordillera Peoples Alliance, Corner House (UK), 
Corporate Europe Observatory, Corporate Watch (UK), Counter Balance, 
Earth in Brackets (US), EARTH PEOPLES (Germany), ECA Watch (Austria), 
Ecologistas en Acción (Spain), EcoNexus (UK), Eco Sitio (Argentina), 
ECVC – European Coordination Via Campesina, EJOLT – Environmental 
Justice Organisations, Liabilities and Trade, 
Entrepueblos/Entrepobles/Entrepobos/Herriarte (Spain), ERA / Friends 
of the Earth (Nigeria), FASE (Brazil), FERN, Food & Water Watch 
(Europe), Food & Water Watch (US), Fórum Mudanças Climáticas e Justiça 
Social (Brazil), France Amérique Latine (France), Friends of the Earth 
/ Amigos de la Tierra (América Latina y el Caribe), Friends of the 
Earth (Africa), Friends of the Earth (Australia), Friends of the Earth 
(Flanders and Brussels), Friends of the Earth (Malaysia), Friends of 
the Earth (Sierra Leone), Friends of the Earth (Sweden), Friends of 
the Earth (US), Global Alliance of Indigenous Peoples and Local 
Communities for Climate Change Against REDD and for Life, Global 
Forest Coalition, Global Justice Ecology Project (US), Global Social 
Justice (Belgium), GRAIN, Green Cross Society (Ukraine), Groundwork / 
Friends of the Earth (South Africa), Indigenous Environmental Network, 
Indigenous Peoples Movement for Self Determination and Liberation, 
International Oil Working Group, International Rivers (US), JA! 
Justiça Ambiental / Friends of the Earth (Mozambique), Jubileu Sul 
(Brasil), Kolectivo El Rebelde (Mexico), Les Amis de la Terre / 
Friends of the Earth (France), Maryknoll Office for Global Concerns, 
Movimento Mulheres pela P at Z! (Brazil), NESPON (India), Network of 
Indigenous Peoples of the Solomon Islands, Nucleo Amigos da Terra / 
Friends of the Earth (Brazil), ODG – Observatori del Deute en la 
Globalització (Catalonia), OILWATCH AMERICA LATINA, Ongd AFRICANDO 
(Spain), OSC RECOs – Redes de Cooperação Comunitária Sem Fronteiras 
(Brazil), Otros Mundos AC / Friends of the Earth (México), Philippine 
Rural Reconstruction Movement (Philippines), Platform (UK), Re:Common 
(Italy), REDD-Monitor, REDES / Friends of the Earth (Urugauy), School 
of Democratic Economics, SOLdePaz.Pachakuti (Spain), South Asia 
Network on Dams, Rivers & People, Taller Ecologista (Argentina), 
Timberwatch Coalition (South Africa), TNI – Transnational Institute 
(Netherlands), Unidad Ecologica Salvadoreña (El Salvador), United 
Kingdom Without Incineration Network (UK), Urgewald (Germany), VZW 
CLIMAXI (Belgium), Woodland League (Ireland), WISE – World Information 
Service on Energy (NL), World Rainforest Movement.
             The declaration is still open for signatures.
  
[ii]           The Environment Committee of the EU Parliament will 
vote on an amendment to the EU ETS Directive. This proposed amendment 
is to adapt the auction timetable and enable the backloading of 
permits (delaying the auction of a certain amount of EUAs from the 
first three years of Phase 3 (2013-2020) to latter years of Phase 3 of 
the EU ETS (2018-2020)
  
[iii]          http://scrap-the-euets.makenoise.org/


Additional Info:
There are 3 main arguments which we have heard until now against the 
idea of scrapping the ETS: (1) Calling for an end to the EU ETS means 
joining hands with the fossil fuel industry; (2) The ETS is the only 
feasible option available to address climate change; and (3) Scrapping 
the EU ETS will be seen as a failure of EU climate policy.

These two-pager document has some thoughts on how to answer each. 
Please spread around and use/change as you wish!

The declaration is still open for signatures of 
organizations/groups/networks. To sign please send an email to: 
scrap.the.ets at gmail.com



Advocating to scrap the EU Emissions Trading Scheme

= Advocating for climate policy that works

  

The EU Emissions Trading Scheme (ETS) is in trouble – big time. That 
much most analysts, policy makers, politicians, carbon traders, 
industrial polluters and NGOs agree. When it comes to diagnosis of the 
causes behind the symptom, prescriptions, or what to do with the 
ailing patient, opinions diverge. As outlined in the statement “Time 
to scrap the ETS”, our investigation of the EU ETS concludes that far 
from being ‘the most effective climate change policy instrument in 
Europe’ the EU ETS has been shown to be a major obstacle to effective 
climate action – and should therefore be abolished.

  
Judging from responses to the “Time to scrap the ETS” statement, many 
agree with the analysis, yet hesitate to join the call for an end to 
the EU ETS. Below we take up the three concerns most commonly raised.

  

1.     Calling for an end to the EU ETS means joining hands with the 
fossil fuel industry and climate deniers who are also calling to 
reject the proposal to withhold ETS permits.

It is instructive to look at who is lobbying for the ETS to be 
rescued. Companies including Shell, Statoil, the Carbon Capture and 
Storage Association, E.On and Électricité de France have lined up to 
support the EU’s efforts to rescue the ETS in hand with financial 
actors such as carbon traders, brokers and verifier firms. These are 
companies that profit from selling or using fossil fuels and trading 
carbon and hence wish to restore confidence in the collapsing market. 
Obviously they are not lobbying for meaningful emissions cuts, or 
structural changes that would bring industrial use of fossil fuels to 
an end.

The statement “Time to scrap the ETS” by contrast also calls for 
policies and action to transform the EU’s energy infrastructure and an 
end to the industrial use of fossil fuels. If we are serious about 
tackling ‘the biggest threat to humanity in the 21st century’, as 
climate change is often described, judgement will need to move beyond 
headlines and focus on bringing about action that actually reduces 
emissions in a socially just transition.

The EU has a clear objective to limit global rise of temperature to 
2°C. To achieve this means achieving a rapid phase-out of fossil fuel 
use, and an end to new coal fired power generation in the EU. It would 
also mean implementing strong policies for polluters to reduce 
emissions at source without any ‘flexibility’ that allows them to get 
off the hook. The past seven years have shown that the EU ETS is 
incapable of helping to bring about this kind of transformation. 
Calling for an end to the EU ETS is acknowledging that coal must be 
left in the hole, and oil in the soil – according to the IEA’s 2013 
World Energy Outlook, as much as 70% of known fossil fuel reserves 
must stay where they are if 2°C is to be even a remote option.[i] 
Instead, the EU ETS has prevented rather than aided a transition to a 
post-carbon economy, subsidised polluters with windfall profits that 
are likely to produce even more pollution and greenhouse gas 
emissions.[ii]

  

2.     The ETS is the only feasible option available to address 
climate change.

For seven years we have heard that trading carbon is the ‘only 
option’. Yet, on closer inspection, the ETS has turned out to be a 
major obstacle to transformative action on climate change in the EU. 
The existence of the EU ETS has fed the illusion that a market-based 
instrument focused on pricing can trigger the changes needed to 
transform our energy infrastructure and the way our economies produce 
and consume goods. No such change has ever been brought about by a 
trading instrument.[iii]

The neoliberal market mantra within the EU has blindly backed the ETS 
and blocked any discussion on policies that work for the climate for 
the past seven years. Worse still, the ETS has actively weakened 
policies such as the Energy Efficiency Directive, the Large Combustion 
Plant Directive and held back expanding implementation of e.g. feed-in 
tariff initiatives.[iv]

It has also provided staggering windfall profits to Europe’s largest 
polluters[v]– profits that likely will have financed further fossil 
fuel capacity, not a transition to a post-carbon economy. In order to 
seriously deal with climate change, we need to tackle the root cause – 
excessive fossil fuel burning - not look on as the EU maintains a 
scheme which allows polluters and financial ‘market makers’ and 
speculators to move around pollution permits, and cash in on windfall 
profits without making any significant contribution to halting runaway 
climate change. The time has come to start moving towards a fair 
transformation of our energy production and consumption away from 
fossil fuel dependence, especially in industrialised countries, 
regulating polluters in a way that ensures that emissions are reduced 
at source.

The ETS is an example of how regulation that works for the climate has 
been pushed away in favour of regulation that favours unproven 
market-based mechanisms. Industries have lobbied for many years to 
avoid real action by heavily opposing any policy that would bind them 
to reduce emissions at source. Abolishing the ETS is therefore not 
only badly needed so space is created for starting a real transition, 
but also to counter the dangerous reliance on ‘free market’ mechanisms 
for areas other than carbon, such as biodiversity or water.

  

3.     Scrapping the EU ETS will be seen as a failure of EU climate 
policy. This would damage the international climate negotiations that 
are facing enough difficulties already as it is, and thus making 
future international action to tackle climate change even harder.

Keeping a failing policy will be – and in due course, will also be 
seen as - a failure of EU climate policy and will damage EU 
credibility. Scrapping the EU ETS now, acknowledging that the 
experiment didn’t work as intended and replacing it with action that 
brings about a just transition away from fossil fuel dependence and 
leaves future generations with a fair chance to avoid uncontrollable 
climate change, will be seen as a success.

Maintaining an ‘experiment’ when the failure is so obvious really is 
inexcusable. ‘Scaling up’ the failure and financing its export to 
other countries like Vietnam and Mexico, and into other areas of 
nature like forests, biodiversity and water, knowing the many dangers 
that it entails, is reckless.

The proposed backloading has already been acknowledged by many 
proponents to the scheme as irrelevant with regards to its effect on 
price[vi]. More and more financial actors that were supposed to be 
‘market makers’ - Deutsche Bank, Morgan Stanley, Credit Agricole, 
Barclays – are scaling back or closing down altogether their carbon 
trading activity. It is ludicrous to assume that postponing the 
auctioning of some 900million permits could turn around a market that 
has been described as being in a state of ‘regulatory 
omnishambles’.[vii] Withholding these permits will not push the price 
of carbon permits from below 5 euros to above the at least 30-50 euros 
widely considered as the minimum to serve as a signal against fossil 
fuel based large scale energy infrastructure investment. Furthermore, 
there is no historical evidence to suggest that price can drive the 
kind of change required for the transition beyond fossil fuel 
economies which our societies face. In short, it is “Time to scrap the 
ETS”!

  
[i]           Carbon Tracker Initiative (2012) Unburnable Carbon – Are 
the world’s financial markets carrying a carbon bubble?, March 2012, 
www.carbontracker.org/carbonbubble

[ii]           Bruyn, S. et al. (2010) Does the energy intensive 
industry obtain windfall profits through the EU ETS? CE Delft, 
www.ce.nl/publicatie/does_the_energy_intensive_industry_obtain_windfall_profits_through_the_eu_ets/1038 
/ Point Carbon, WWF (2008) EUETS PhaseII – The potential and scale of 
windfall profits in the power sector, 
http://wwf.panda.org/index.cfm?uNewsID=129881

[iii]          Lipow, G. (2012:) Solving the Climate Crisis through 
Social Change. Public Investment in social prosperity to cool a 
fevered planet, Praeger: US. / Food and Water Watch Europe (2012), 
Pollution Trading - Cashing Out Our Clean Air and Water, 
http://documents.foodandwaterwatch.org/doc/EUPollutionTrading.pdf

[iv] 
         http://www.guardian.co.uk/environment/2007/aug/13/renewableenergy.energy

[v]           CTW and CEO (2012) EU Emissions Trading System: failing 
at the third attempt. 
www.carbontradewatch.org/publications/eu-emissions-trading-system-failing-at-the-third-attempt.html

[vi]          “Backloading will keep the market ticking,” Davies said. 
“It’s a tiny proposal ... (that) will effectively have no consequence 
on investment or profitability for energy intensive industries.” in: 
Point Carbon: EU CO2 market fix hangs in balance after MEPs urge 
rejection. 24 Jan 2013, http://www.pointcarbon.com/news/1.2152161
[vii]           Point Carbon: EU CO2 scheme a “regulatory 
omnishambles”: Barclays. 19 Nov 2012. www.pointcarbon.com