Trashing the atmosphere at a discount rate?

Europe fails to regulate its carbon market

Despite my office being located as far from Brussels and Strasbourg as is possible in Europe, depressing accounts keep reaching me from the European institutions. Yesterday, the members of the European Parliament rejected a proposal to salvage the main instrument of the EU climate policy: its carbon market. While this might seem only of technical relevance, the impact of this vote (and the general trend that it is following) is something to seriously worry about.

The news of this vote took me five years back, when I joined the international youth climate movement during the UN climate conference in Poznan. In the UN hallways I took part to my first media stunt to call on the EU to adopt meaningful pollution reduction targets (back then, ministers were debating in Brussels over the “EU Climate Package”). But I spent most of the time during the conference organizing workshops in Poznan’s schools to introduce local Polish teenagers to the basics of climate science, the social impacts that raising global temperatures have, and the solution available to us (you could complete school and enter university without having heard of climate change). These two weeks were for me a life-changing experience, as I became both more aware of the urgency of the situation and inspired by the fantastic creativity and perseverance of young people around the planet working relentlessly to propose solutions. But five years later, this vote makes me wonder how much progress has been done both on the regulation of pollution in the EU and on winning over the coal lobby in the battle for climate awareness in Poland…

What’s the EU-ETS and why do I care?

The EU carbon market (EU Emission Trading Scheme - “EU-ETS”) is currently the main instrument In Europe to reduce emissions of greenhouse gases. It imposes a price on the pollution emitted by the 11.000 largest polluters across the continent. It does this however not with a fixed levee, but leaving the market regulates the price of pollution. Such a scheme would, the argument goes, reward economic actors who take make the right investments to curb their emissions and impose additional costs to those who are unwilling to reduce the pollution that they generate. However, due to many factors, this carbon market is oversupplied at the moment with an excess of “tradable tons of carbons”. With prices ridiculously low, polluters have no incentives to make the right investment decisions (Bloomberg has recently reported that investment in green energy is falling around the planet) and the EU-ETS fails to reach its objective. The European Commission - as well as NGOs and a large number of businesses - proposed to first adopt a short-term measure with immediate effect (before deeper reforms are possibly enacted): postponing the auctioning of a limited number of carbon credits so as to tighten the market. This would have offer a temporary fix as it would have allowed the pollution levee to reach a more adequate level. Under intense pressure by carbon-intensive industries worried to continue trashing our atmosphere at low costs, the Members of the European Parliament have rejected yesterday this proposal; thus rendering the main EU climate policy void of any effective impact for years to come.

Certainly, one can question the notion of solving the climate crisis by creating a market for a new commodity instead on imposing more accountability on economic actors. However, the question on which climate policy is the most effective was not the object of the vote yesterday. The choice offered to the members of the European Parliament was whether to leave the existing carbon market completely on its own despite the absence of a reasonable price on pollution or if it is the role of decision-makers to ensure that polluters are not allowed to free ride. After this vote and without any short-term prospect for a meaningful regulation of this market, a ton of carbon is now worth less than three euros on the European carbon market (I could barely have my daily espresso for this price).

What about Poland in all this?

Looking at how the votes of the MEPs are spread among the member states, one notices one striking fact: only one country has voted unanimously (an impressive 50:0 ratio) against pricing more adequately pollution across the continent: Poland. This does not come as a surprise as the Polish minister of the environment, Marcin Korolec, had been one of the loudest voices in these discussions over the past months. What’s distressing however is the fact that the same country has successfully prevented the adoption of about every possible piece of climate legislation in the EU over the past years. It is not as if Poland (or rather the Polish government and parliamentarians) is opposed only to this particular policy option, they have simply vetoed every possible action on climate change at the European level. And to make the matter worse, the EU incomprehensibly accepted last year that the same Marcin Korolec be the main conductor of the UN climate talks next November (see AaN’s “political theater” for our account of the incident).

The country’s elite certainly deserves more than ever a red card for being at its coal industry’s beck and call and acting as a climate pundit. However, other European capitals should be warned against relying behind a Warsaw blaming game as this vote is also the result of their failure to offer the right incentives - both positive and negative - for Poland to dissociate its national interest from that of a minority of industry owners (not to mention that the MEPs from other countries including the UK and Italy also voted in majority against the proposed reform).

From local to global: the Domino Effect
The consequence of this inability for the EU to take adequate climate action goes well behind the failure to reduce its own carbon footprint. First, as Australia decides to link its own carbon market with the EU-ETS, the ridiculous price of carbon in Europe already has repercussions down under, compromising the effectiveness of the pollution revenues expected for Canberra. Secondly, the current deadlock in Brussels will deal a serious blow to its already undermined credibility in the global climate talks.

Certainly, over the recent years climate leadership has been found more in the Global South than among Western nations. Earlier this month, the Least Developed Countries committed for instance to accept binding emissions reduction targets (something that they have not been expected to under the “common but differentiated responsibility principle”). Over the recent years, ambitious mitigation policies have been announced in countries as diverse as the Maldives, Costa Rica, South Korea and Mexico.

However, these exemplary countries are left with little partners in the North with whom to have a honest dialogue on a global response to the climate crisis. Since Fukushima, Japan struggles to deal with a never-ending energy crisis and the upcoming election in Australia brings negative prospects for serious climate action. In Washington, observers have expressed growing concerns than Obama’s references to the urgent need to tackle climate change might fall short of any political action. Closer from Brussels, Norway has kept playing a confusing double game: promoting ambitious reduction of emissions on the one hand while pumping schizophrenically as much carbon as possible from its seabed.

Sitting on the Arctic Circle
This last point brings me back to the Arctic. You would think that being based so far North on the Arctic circle insulates you from the stirs of EU (and global) climate policy. On the contrary, one is only more aware here of the dramatic impact that the decisions made in Brussels, DC or Beijing have already had on our natural environment and how these changes have impacted local communities. In the research ongoing in my colleagues’ offices, climate change does not come in the shape of an abstract graph but in the stories of circumpolar communities and peoples forced to reconceived their cultures and way of life.

Perhaps we should ensure that the next vote by MEPs on the future of our climate takes place physically in an environment where the testimony of impacted communities can be heard louder than the continuous and self-interested bellowing of carbon-based lobbies.

Picture credit: CEE Bankwatch Network, rosswebsdale, Dinh Nguyen-Phan, SenseAndSustainability.net