TheCompensators* » Fix it or scrap it! Report analyzes the surplus of allowances in the EU ETS

Fix it or scrap it! Report analyzes the surplus of allowances in the EU ETS

It’s not a secret that there are too many emission allowances in the EU emissions trading system. Just how many there are shows a recently published report by Sandbag. It analyzes the surplus of emission allowances built up in the EU emissions trading system. The report estimates the excess of emission allowances could reach as high as 4.5 billion by 2020, and that the planned backloading – postponing emission allowances until 2019 and 2020 – will not help enough to reduce it.

We’ve been saying for years: ‘Fix the emissions trading scheme’,” Sandbag director Bryony Worthington told the news website Responding to Climate Change. “But sadly the incentives for investment in green growth are still not there. It has now got to the stage where the ETS is so broken we are recommending ditching it unless problems are sorted out with new laws within the next 12 months.”

The report gives three recommendations how to fix the ETS:

  1. Improving the orderly functioning of the market through a market stability reserve (a mechanism regulating surplus and deficit of emission allowances) as soon as possible,
  2. Protecting the competitiveness of European industry through improvements of the free allocation rules,
  3. Increasing EU climate ambition by canceling allowances and re-calculating the post-2020 trajectory.

You can find the full report here.

Compared to the surplus, what TheCompensators* are doing might seem like a drop in the bucket. However, we are still fighting to improve the EU ETS! You can help us by donating here.


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