Polluting industries stand to gain from EU ETS reform, report claims

A reform of the EU Emissions Trading System (ETS), which is being voted on by the European Parliament next week, could end up giving more than €230bn in subsidies to polluting industries, a new report has claimed.

The Carbon Welfare report, released yesterday (7 December) by research and campaign group Corporate Europe Observatory, reveals that some of the EUs biggest polluters are lobbying for giveaways equating to more than €230bn in the next phase of the ETS, which would run between 2021 and 2030.

Climate and Energy Commissioners met business lobbyists seven times more than public interest groups to discuss the future of the world’s biggest scheme for trading greenhouse gas emissions allowances, the report claims.

It’s release comes ahead of next week’s European Parliament vote on the scheduled EU Emissions Trading System (ETS) reform, with tabled amendments including additional subsidies being given to pollution-heavy industries such as the steel and energy sectors.

ETS lobby efforts, led by oil giant Shell, global steel company ArcelorMittal and EU steel industry association Eurofer, have translated into a volume of free emission allowances worth more than €175bn during this period, according to Corporate Europe Observatory. Additionally, energy-intensive industries are lobbying for an EU-wide scheme to compensate for electricity price rising caused by emissions trading – the total cost of these subsidies could be up to an additional €58bn, the report states.

‘Perfect opportunity’

Co-author of the report Oscar Reyes said: “The EU’s emissions trading reform is turning out to be a carbon welfare scheme for polluters with ordinary people being asked to pick up the bill”.

Fellow co-author Belén Balanyá added: “The revision of the ETS directive has presented a perfect opportunity for lobbyists to hollow out EU climate action… Even small changes to the way pollution permits are handed out can result in millions of industry profits or savings. Instead of making big polluters pay, the ETS now looks set to boost their profits.”

Members of European Parliament (MEPs) have seen increased pressure relating to the EU ETS reform from lobbyists representing different industry interests in closed-door meetings, the report claims. One example includes aluminium producers successfully pressuring the Italian Government to propose an electricity compensation scheme in the European Council.

The report also states that EU Rapporteur and Scottish Conservative MP Ian Duncan included a €1.7bn exemption for offshore oil producers in a report to the European Parliament preceding its Environment Committee vote on the proposed amendments. Duncan has elsewhere promised to protect the Scottish oil and gas industry from the “threat” of EU environmental measures, Corporate Europe Observatory says.

The Corporate Europe Observatory report comes off the back off a similar study released last week which found that the cement industry – accounting for around 5% of the world’s total greenhouse gas emissions – appears to be shaping the EU ETS, despite recent claims that the industry is in line with Paris targets.

Alex Baldwin

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