Today the Environment Committee of the European Parliament votes on the reform proposals for the European Emissions Trading System (EU ETS). A number of European economists are taking the opportunity to address an open letter to European lawmakers: “Review clause for EU ETS Directive to ensure carbon price are reflected for basic materials”. The production of basic materials like steel, cement, and aluminum accounts for a significant share of Europe’s greenhouse gas emissions (16%). For Europe to achieve its Paris climate objectives, large scale emission reductions are necessary. Innovation and investments in climate-friendly material production and use can facilitate such emission reductions. This requires not only a strong EU ETS price signal, but the EU ETS price also needs to be reflected in materials prices. Currently, CO2 allowances are allocated for free to producers of materials to avoid carbon leakage risk. This is also envisaged for the period after 2020. The unintended consequence of this approach - material prices reflect only a fraction of their actual carbon price and incentives for innovation and investment in climate-friendly materials are largely muted. Only once other parts of the world implement similar carbon pricing levels and jointly reduce free allocation would the carbon price be fully reflected in materials prices. Whether this strategy succeeds depends on international development in the next years. If there is no international phasing out of free allowance allocation, it will be crucial to quickly adjust the European strategy and ensure with other measures that the carbon price is reflected in basic material prices. The signatories of the attached letter request the European Parliament and Member State Governments to include in the EU ETS Directive a provision for a review no later than 2020, in order to ensure that EU ETS prices will be reflected in material prices. This is essential to turn climate-friendly material choices into economic success.
martes, 27 de diciembre de 2016
Carta abierta a los reguladores del ETS
Karsten Neuhoff ha promovido esta carta, a la que nos hemos sumado unos cuantos académicos europeos, para animar a los reguladores a que incluyan sistemas para incorporar el precio del CO2 a los materiales como cemento, acero o fertilizantes. Aunque España, como siempre, sigue frenando este tipo de reformas...