Fit for 55: EU-Emission Trading Scheme (EU ETS I) for Industry and Energy
In the EU, greenhouse gas emissions are to be reduced to zero by 2050. On the way there, they are to be reduced by 55 percent by 2030 compared to 1990. To achieve this goal, the Commission has presented a comprehensive package of measures ("Fit for 55") for all sectors. The Centre for European Policy (cep) considers central proposals to amend the directive on emissions trading for industry and energy to be questionable. The think tank fears production and emissions relocations to third countries.
cepPolicyBrief
"Requirements to reduce the number of free allowances do not achieve their goals. They increase the risk of EU industry relocating production and emissions to third countries, so-called carbon leakage," warns cep economist Martin Menner, who examined the directive with cep lawyer Götz Reichert. In addition, the so-called climate toll CBAM for EU exports neither provides for exemptions when free allowances expire nor for rebates on allowance costs.
"Instead of introducing the CBAM, companies threatened by carbon leakage should receive 100 per cent of the benchmark emissions as free allowances," Reichert demands. The goal of lowering the so-called cap once and tightening the linear reduction factor is therefore only justifiable with appropriate carbon leakage protection. Auctioning proceeds should not finance the EU budget or subsidies for the decarbonisation of industrial sectors not affected by carbon leakage but should be used for direct income support or to reduce distorting taxes, emphasise the cep scientists.
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