A few days before the European Commission presents the revision of the EU Emissions Trading System (EU ETS or ‘ETS’), scheduled for Friday 17 July, the political groups in the European Parliament are seeking guidelines and compromises and for some of them, these are also within their own political family.
EPP takes the lead. It emerged on Wednesday 15 July that Peter Liese (EPP, German) was appointed the European Parliament’s rapporteur both on the revision of the ETS and on the proposal on monitoring, reporting and verification (MRV) of emissions in the shipping sector. The legislative proposal on revising the benchmarks will be led by a Polish MEP from the same group, Adam Jarubas. The EPP wants the latter proposal, which makes it possible to unlock the free allowances allocated to companies, to be dealt with under an urgency procedure in Parliament so that it can be published in the Official Journal of the European Union “before Christmas”.
At a meeting with the press, Peter Liese defended the priorities of the German EPP delegation: - lowering of the linear reduction factor (LRF), which cuts the number of emissions on the market each year, from 4.4% in 2030 to 3.4% after 2030; - a change to the market stability reserve (MSR) to continue distributing allowances after 2042; - inclusion of international carbon credits in the ETS; - more free allowances as a result of lower benchmarks.
The EPP, which has not yet made its position public because of an ongoing debate between national delegations does, however, stand united against extending the scope of the ETS to extra-European flights, as initially planned.
When asked by Agence Europe about offsetting the addition of ETS flexibilities in other European legislation (see EUROPE 13909/21), Peter Liese said there was no need to increase the climate ambition of other legislative texts, while underlining the fact that it was easier to decarbonise the agriculture sector (LULUCF) than industrial installations.
Ambition is found in the centre. For the Greens/EFA group, the only way to maintain the climate ambition of the text in the European Parliament is to form a central coalition. At a meeting with the press, its co-chair Terry Reintke (German) and shadow rapporteur on the initial ETS text Michael Bloss (German) said that “the only way to have a stable majority within Parliament is for it to be found in the centre”. Terry Reintke thus expressed her concerns “about the attacks on the ETS by the EPP” and said that the Greens/EFA “would push for a revision that maintains ambition”.
Michael Bloss said that “the Commission was muddying the waters by changing different variables (MSR, LRF) that could increase by 40% to 50% the quantity of CO2 emission certificates in the ETS system”. He confirmed that “in the past, free allowances enabled some companies to make more money by selling their free allowances than by selling steel, for example”, an argument based on studies, notably by Bruegel and NGOs such as Carbon Market Watch who both looked into the over-allocation of free allowances.
The Greens/EFA are therefore proposing that free allowances be placed in a decarbonisation bank and that they should only be accessible to companies that decide to invest in Europe. The group is also proposing an extension of the scope of the ETS to include waste incinerators and, in addition to the extension to extra-European commercial flights, the inclusion of private jets. The Greens/EFA are opposing the introduction of international credits into the ETS, which in their view amount to “greenwashing”.
Friends of ‘cleantech’. On Tuesday 14 July, 17 MEPs from the Greens/EFA, S&D, Renew Europe and the EPP, sent a letter to Commissioner for Climate, Wopke Hoekstra, calling for the revision of the ETS to support clean technologies. They are specifically asking for the revision to include the use of ETS revenues to decarbonise European industry.
Fewer clear-cut positions. The S&D group warned on 10 July that “any form of deregulation or weakening of the ETS would shift the burden of emissions reductions onto other sectors, making the overall transition more difficult and more costly”, although they did not provide any further details at this stage.
To date, the Renew Europe and The Left groups have not communicated an official position.
Italian Nicola Procaccini, co-chair of the European Conservatives and Reformists Group, said in a speech on 20 May that the benchmarks needed to be revised, along with targeted measures to avoid distortions in the maritime sector.
Historically, the ESN group and the Patriots for Europe have opposed the ETS system. On 9 June, the German delegation of the ESN (AfD) tabled a draft law to repeal the ETS Directive. (Original version in French by Nadège Delépine)