EU emissions trading scheme to bring small carbon savings
Campaign group call for tighter caps on carbon emissions covered by the ETS in Europe each year.
A new report by carbon emissions trading campaign group Sandbag predicts that the five year period of the EU’s emissions trading scheme (ETS) ending in 2012 is set to deliver carbon savings of less than a third of 1% of total carbon emissions.
The analysis also predicts that only 32 million tonnes of pollution permits will need to be surrendered to meet the cap on carbon emissions – a tiny fraction of the 1.9bn tonnes of carbon emissions covered by the ETS each year.
The recession has caused production to crash and companies no longer need the pollution permits. The number of pollution permits held by steel and cement manufacturers and awarded in anticipation of high levels of production has risen sharply. They can sell pollution permits on the open market or save them until the next ETS phase, when the carbon price may have risen. In 2009, the top 10 holders of surplus carbon emission allowances had 119 million, which is four times the number of the previous year.
Steel and cement manufacturers are predicted to hoard almost 200m surplus pollution permits by end 2012
The report by Sandbag assumes and economic recovery and a return of carbon emissions to 2008 levels in 2011. The biggest holder of carbon emissions allowances, steel-maker ArcelorMittal, will have amassed over 100m pollution permits, worth over £1.5bn at today's price. The next three biggest in the list, Lafarge, Corus and Cemex, are predicted to have over 78m surplus pollution permits between them by 2012.
An ArcelorMittal spokesperson said recently in an event, they would not sell carbon emissions allowances they had received from governments as they would need them for future production needs or, alternatively, they would invest them in energy efficiency projects in their plants. Therefore, any surplus pollution permits they would have by end 2012 did not constitute a windfall profit.
According to Sandbag, one solution is to reset the caps based on the actual levels of carbon emissions – not the levels predicted before the recession – and cancel pollution permits. Another, backed by DECC, is for the EU to increase its 2020 carbon reduction target from 20% to 30%, as it would have done at the Copenhagen climate change summit last year if other nations had made similar commitments.
A spokesperson for the Department of Energy and Climate Change (DECC) said: 'We agree that in phase II of the EU ETS [2008-2012] the cap on European emissions is not tight enough, which is why under the revised EU ETS from 2013 there will be a much tighter cap.'
However, both industrial and steel lobby groups, Business Europe and Eurofer have opposed changes to the ETS, saying it would put jobs at risk.