European lawmakers set out climate plan details on emissions trading, carbon reductions and clean coal

It was dubbed, slightly tongue-in-cheek, ‘Super Tuesday’. On 7 October, the European Parliament’s Environment Committee voted on three key legislative proposals that are central to the European Union’s climate strategy: the future of the EU emissions trading scheme (ETS), binding emissions targets for non-ETS sectors, and carbon capture and storage (CCS).

The Environment Committee does not have the final say. Their positions must be rubber-stamped by the full European Parliament, and then negotiated with EU member states represented in the EU Council. Nevertheless, the Super Tuesday votes represent a milestone.

This is because months of horse-trading have led up to this point. Lawmakers in charge of the legislative dossiers have tried to bring all shades of European political opinion on board. Consequently the Environment Committee’s positions should resist future tinkering, though, as Avril Doyle, an MEP from Ireland’s Fine Gael party who is in charge of the ETS dossier, said, a “battle royal” lies ahead with EU member states on some issues.

Easy on industry, tough on utilities

On reforming the ETS after 2012, the Environment Committee broadly followed the European Commission’s original proposal. However, on the controversial question of auctioning of emissions rights, MEPs said 15 percent of allowances for heavy industry should be auctioned in 2013, rising to 100 percent in 2020. This is a far lighter touch compared with the Commission’s starting point for auctioning of 60 percent.

This may represent a weakening of the proposals in some eyes, but Doyle had to break ranks with her own colleagues even to achieve this. Most members of her centre-right European People’s Party (EPP) group wanted even more free allowances for industry. Following the vote, German EPP lawmaker Karl-Heinz Florenz was strongly critical, saying “this is going to cost us jobs,” because industry may decide to relocate to lower cost regions.

Finnish Green MEP Satu Hassi oversaw proposals requiring EU countries to reduce non-ETS emissions by 10 percent overall between 2013 and 2020

Other positions on the ETS backed by lawmakers include full auctioning of allowances to the power sector from 2013 (though with some exceptions, for example for district heating), payment of half of auction revenues into an international climate protection fund, inclusion of shipping in cap-and-trade, and a higher exemption threshold for small-scale emitters (up from the Commission’s proposed 10,000 tonnes of CO₂ equivalent per year to 25,000 tons).

Outside the markets

While the ETS obliges industry to cut emissions, Finnish Green MEP Satu Hassi oversaw proposals requiring EU countries to reduce non-ETS emissions by 10 percent overall between 2013 and 2020. This will contribute to a goal of a 20 percent cut by 2020 compared to 1990 levels, rising to 30 percent if an international climate deal is done. Under Hassi’s direction, the Environment Committee added new longer-term emissions reduction targets – 50 percent by 2035, and 60-80 percent by 2050.

Lawmakers also agreed that countries should incur potentially steep automatic fines for missing emissions targets: €100 for each excess ton of CO₂, with over-achieving countries able to sell their excess entitlements to laggards. Meanwhile, the use by countries of offset credits from the United Nations Clean Development Mechanism (CDM) will be more tightly controlled than originally foreseen by the Commission – spelling more uncertainty for CDM project developers.

Speaking after the votes, Hassi declared it “a good day,” though she warned that the question of carbon fines would be “a hard issue” in negotiations with the EU Council.


Coal plants face 2015 ban

The third part of the package was carbon sequestration, a technology that promises much, but has so far failed to get off the ground, largely due to cost. As a boost to its deployment, lawmakers said that from 2015, new power plants should have an emissions limit of 500 grams CO₂ per kilowatt hour. This would have the effect of banning new coal-fired power stations, unless they capture and store their carbon. The Bellona Foundation, an environmental group strongly pushing CCS, called the vote “historic.”

Lobbyists and environmentalists will now spend weeks poring over the complex details of the Committee’s votes. But the stage has been set for negotiations with the EU Council, and hoped-for finalisation of the legislation before the European elections in mid-2009.

Author: Stephen Gardner, Climate change Corp