On October 7th, the European Parliament’s Environment Committee casted its vote on some of the most important issues which will determine European environmental policy (and to a certain extent industry choice as well) for decades to come.

As opposed to the European Commission’s original proposals, the “carbon offset” (i.e. the ability to pollute over the t arget limit as long as the extra emissions are paid for i.e. bought off other countries) a member state may use in order to reach its carbon reduction target may not exceed a maximum 8% of the emissions reductions for the period 2013 -2020. The equivalent percentage for the industry is 4% for the same period (and 6.5% for the period 2008 -2012).

The MEPs approved the national targets proposed last January by the Commission for the period 2013 -2020, and called for these emissions to be halved by 2035. If membe r states do no meet their target, they will be forced to pay the so-called “excess emissions penalties”, amounting to some €100 per extra tonne of CO2 emitted. Member States are (in parallel to the industry) obliged to reduce their greenhouse gas emissions from sources that are not covered by the ETS – e.g. road and sea transport, buildings, services, and farming.
And in case they do not pay the foreseen excess emission penalty, the extra CO2 emitted will be ded ucted from the ETS allowances which they will be entitled to auction, reads an amendment adopted by the committee. In that case, it will be t he European Commission which will allocate the deducted allowances.

Whereas countries cutting their greenhouse gases below their targets would be able to sell that part of their emissions ‘ allocation in the future, the revenue generated in such way should then be spent on “green” measures (renewable energy, energy efficiency etc). The same applies for auction revenues from the ETS.

However, industries using large amounts of energy – such as cement, paper, steel and chemicals – to make their products are “off the hook” for now: In order not to hamper their global competitiveness in comparison to other industries which do not have to meet the ETS criteria they will receive, for the time being, most of their carbon emissions permits for free. Otherwise, such factories would be forced to evacuate their operations, jobs and emissions to third countries (“carbon leakage” effect). However, a phase-in of auctions for pollution permits is also foreseen.

Green Parties and NGOs seem to still have mixed feelings about the outcome of the Parliament vote: “As a result of the environment committee vote, countries and industries can buy their way out of their required emissions reductions.

It is clear that the EU is so far only partway down the road to being world leader against climate change” commented Delia Villagrasa, senior advisor at WWF.
On October 20-22nd, it will be up to the EU environment ministers to decide on the legislation.

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