We need an even stronger EU Climate Policy

Jo Dirix's picture

Wouter PeetersGlobal leaders are postponing the negotiations on a new binding emissions reduction treaty until 2015, coming into effect no sooner than 2020. The UN and the EU focus their climate policies on the prevention of a 2°C global mean temperature (GMT) rise by 2100, relative to pre-industrial levels, which implies that emissions have to peak and decline before the end of this decade. Since strong mitigation action remains absent, studies show that a 4°C rise, by 2100, is at least more likely. Although the emissions from developed countries have largely stabilized, those of emerging economies (BRICS) have doubled mostly due to the growing international trade between industrialized and developing countries.

The EU, the global leader in climate action, has set up an emissions trading system (ETS). Established in 2003, operationalized in 2005, and implemented into three phases covering 15 years, the EU ETS aims to reduce emissions by 20% by 2020 and 80% by 2050, relative to 1990 levels. The EU ETS is a cap-and-trade market-based mechanism, which means that the EU places a cap on emissions, creates emissions allowances in correspondence with the cap and distributes these allowances to the users mandated to comply with the cap. Although the EU ETS has been criticized for gaps in information, insufficient or wrong incentives, low carbon prices, uncertainty about long-term pricing, high transaction costs and the overallocation of emissions permits, it claims to have lowered emissions in its first two phases. Nevertheless, because of overallocation of emission entitlements together with the possibility of offsetting (extra emissions permits can be obtained by investing in abatement projects in developing countries), a vast amount of surplus entitlements remains on the carbon market and it is estimated that this will be felt throughout the ETS third phase (2013-2020) and possibly long afterwards. Even more worrisome is that the number of surplus entitlements is so high that it renders the 2013 cap irrelevant. Furthermore, because of the oversupply, emission permits' prices figure around €4.75/US$6.17 per tonne of CO2 while a recent study by Rogelj and collegues (Nature 493: p.79-83) estimates that the carbon price should figure around €30.75/US$40 in order to limit global warming to 3°C global mean temperature. Although The European Commission has proposed long-term structural measures to strengthen the EU ETS, it struggles to overcome the political opposition (most notably by Poland) to implement even a temporal fix, i.e. delaying the auction of a number of entitlements.

In a paper recently published in Climate Policy, we assess the EU ETS according to Simon Caney's two criterions of justice, namely, (1) an effectiveness criterion (does the policy actually lower emissions?) and, (2) a burden-sharing criterion (does it distribute the burdens fairly?) We argued that by grandfathering emission allowances (i.e. handing out allowances cost-free) the EU ETS violates the second criterion. Furthermore, we stated that because of the malfunctioning offsetting system, the EU ETS violates both criterions. However, since the EU promised to start auctioning entitlements as a default allocation method at the beginning of the ETS's third phase (2013) we deemed the EU ETS eligible of partly complying with the two mentioned criterions.

With these considerations and facts in mind, it becomes clear that we need an even stronger climate policy. Although a diverse array of NGO's are demanding that the EU ETS gets scrapped (http://scrap-the-euets.makenoise.org/) we deem it ethically necessary that the EU ETS gets strengthened. Seeing the climate of political inaction, it is very unlikely that a new policy would be put in place in time. Therefore, we advocate that the EU implements at least some of the long-term measures proposed by the European Commission, inter alia: retire a number of allowances permanently, limit the possibility of offsetting, increase the EU reduction target to 30%, extend the scope of the ETS to sectors currently not covered, etc. Although we applaud the EC's initiative to mend the EU ETS, we do regret that the EU would choose to do so through a short term fix instead of through structural long-term measures.

With emission trading schemes being voluntarily deployed in a number of countries and regions, it is of pivotal importance that the EU, as frontrunner, reaffirms its most honorable position of leading-by-example. The window of opportunity to fight off climate change's most severe consequences is rapidly decreasing. Hence, the EU ETS - the largest existing climate policy tool in the world - needs to be adjusted so that it respects the demands made by justice and thus lowers emissions while mandating a fair burden sharing. The time to act is now.

Jo Dirix is a doctoral researcher at the Department of Philosophy and Moral Sciences of the VUB. He conducts research into the ethical dimensions of climate change, in particular the possibility of an integration of distributive and participatory justice into a theory on climate justice, taking into account both the intra- and intergenerational perspectives on the climate change problem.

Wouter Peeters is a doctoral researcher at the Department of Philosophy and Moral Sciences of the VUB. He is involved in a doctoral research project on the spatial and intertemporal dimensions of climate justice. The overarching goal of this research project is to construct a conception of justice that takes account of current as well as future living people and integrates the participatory as well as the distributive dimension of justice. He is currently investigating an integration of the Capability Approach and the Ecological Space paradigm.

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