BRUSSELS, 18 September - The International Emissions Trading Association (IETA) welcomes and supports the proposals published this week by the European Commission for a more ambitious 2030 emissions reduction target.
IETA fully agrees with the European Commission’s impact assessment that the EU ETS should be enhanced and expanded to ensure that is fully aligned with the EU’s climate neutrality target.
To complement the Commission’s publication, IETA is today releasing a report which seeks to help European policymakers to take the necessary steps in the journey to net zero.
“Meeting the EU’s Climate Ambitions: The Evolution of Carbon Pricing to 2050” sets out the case for the expansion and deepening of the use of carbon markets to help achieve the EU’s and indeed the world’s climate goals for 2050.
IETA’s report highlights how swift inclusion of the maritime sector into the EU ETS, and the establishment of separate emissions trading systems for road transport and buildings is necessary to ensure that all sectors are incentivised to move toward net zero.
Europe should also reintroduce robust removals credits in the EU ETS to encourage technologies and projects that remove, rather than simply reduce, emissions of greenhouse gases, IETA says.
“IETA is glad to see an acceptance of the vital role that removals will play in reaching net zero as highlighted in the impact assessment,” Adam Berman, Director of EU Policy, said. “IETA fully supports the Commission’s effort to examine how market-based mechanisms can deliver a robust and transparent European framework for carbon removals”.
“An extension in the longer term of the ETS to new sectors would increase the economic efficiency of emissions reductions and would help the EU to achieve its climate objectives,” the IETA report asserts.
Not all sectors have the same cost of abatement, however, and in the first instance Europe should consider setting up separate emissions markets for sectors such as road transport and buildings to ensure that abatement remains cost-effective, the report states.
“The ultimate goal of EU climate policy must be to include all sectors in the EU ETS. The maritime sector is ready for inclusion, but there is a risk in placing road transport and buildings into the EU ETS too soon”, said Berman. “IETA is proposing that stand-alone Emissions Trading Systems are established for the road transport and buildings sectors as a stepping stone to EU ETS inclusion.”
Equally, Europe’s action on emissions must be matched by equivalent efforts among the community of nations, IETA says.
The report notes that “Through working toward the internationalisation of carbon markets, the EU can ensure that the risk of carbon leakage is diminished; protecting the competitiveness of European industries which compete globally”.
International cooperation has the potential to enable $250 billion per year of global cost reductions to Nationally Defined Contributions (NDCs) by 2030 (according to a recent study prepared by IETA and co-sponsored by Carbon Pricing Leadership Coalition, with the help of researchers and modellers from the University of Maryland) and has the capacity to allow for a more even playing field in relation to competitiveness concerns.
IETA’s report on “Meeting the EU’s Climate Ambitions: The Evolution of Carbon Pricing to 2050” can be downloaded from the IETA website here