The EU’s climate policy super year is the last chance to tackle industrial pollution

5 February: Deadline for public consultations on the EU emissions trading system, effort sharing regulation and land-use, land-use change and forestry regulation
22-26 February: EU industry days 
23 March: Deadline for public consultation on the industrial emissions directive
18 March & 21 June: EU environment Council
25-26 March: European Council
June: The Commission is expected to publish the “Fit for 55” climate package and the Carbon Border Adjustment measure proposal 

In December 2020, EU leaders agreed on a new 2030 net target of cutting greenhouse gas emissions by at least 55% by 2030. The European Parliament supports a 60% objective (gross i.e. without sinks). Carbon Market Watch advocates for a 65% target and for keeping sinks separate from this objective. 

In June, the European Commission is expected to table legislative proposals to reform almost every EU climate and energy policy under the so called “Fit for 55” package.

The most important file for Carbon Market Watch is the EU emissions trading system (EU ETS). The scheme has successfully contributed to phasing out coal from the power sector. But due to the exemptions and generous pollution subsidies for the heavy industry, it has not cut CO2 pollution from sectors like cement, steel and chemicals. 

Carbon Market Watch recommends the following for the EU ETS revision:

• Increase the pace at which emissions are reduced annually (“LRF) and introduce a one-off reduction of the cap.
• Increase of the rate at which the market stability reserve (MSR) absorbs surplus permits off the market to 36% from 2024 onwards, adopt declining thresholds and an automatic cancellation for allowances held in the MSR for more than five years.
• Fully phase out the free allocation of pollution permits.
• Earmark 100% of the auctioning revenues towards industrial innovation, modernisation, just transition and international climate finance.
• Include international maritime transport, international aviation and waste incineration.
• If a carbon adjustment measure (CBAM) is implemented, extend the EU ETS to cover importers’ emissions and end other carbon leakage measures.
• Do not include road transport and buildings.
• Do not allow carbon dioxide removal (CDR) credits.

Directly linked to the EU ETS, the Commission is expected to publish its proposal for a carbon border adjustment mechanism (CBAM) in June 2021. Carbon Market Watch advocates for a fair and strong CBAM as an alternative to the free allocation of emissions allowances under the EU ETS.

Another important file, the revision of the industrial emissions directive (IED) is a unique opportunity to include greenhouse gas emissions under the scope of this environmental law. This would make the IED an additional tool to reduce industrial carbon pollution. 

Save national climate targets

The EU Commission is considering scrapping the effort sharing law that sets binding national emission targets in sectors such as transport, buildings, agriculture and waste. Instead, the EU executive wants to bring transport and buildings under the EU carbon market. 

This would be a bad idea:

• It would not significantly reduce emissions from these sectors.
• It would shift the burden of cutting emissions from big polluters to consumers and risk hitting low-income families worst. 
• It would take away the incentive of countries to implement climate measures at national, regional, local level.