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Your decision regarding the EU Emissions Trading Directive will be very influential for the future of European and world-wide climate policy. We as German NGOs urge you to see the strategic importance of an ecologically effective and economically efficient Emissions Trading System between companies in the EU.
Without such a system it will be more difficult and more expensive to reach the EU climate target. The ET System allows businesses to implement climate policies in the rhythm of their investment policy, which minimises the negative and maximises the positive effects on employment.
An effective Emissions Trading System will transform businesses which tend to see only the business risks of climate policy into businesses which look for the business opportunities of a carbon restricted future.
An environmentally effective and ecologically efficient Emissions Trading System in Europe (and probably soon in Japan), will be the most important lure to bring the US to come back to the international climate regime.
We appreciate that the EU Emissions Trading system supplements the other instruments for climate protection and energy efficiency. In this context we ask you to commit yourself to ambitious measures to strengthen combined heat and power generation, renewable energies, energy efficiency policies, energy tax harmonization and removal of subsidies for fossil fuels.
Many players, who have no interest in climate protection, but in profit, will participate in an ET System. This is one of its strengths. But to be as well ecologically effective it also means that an ET System needs a strict framework and there should be no compromises in the wrong place:
We need a mandatory ET System for all EU states, for all relevant sectors and businesses. Otherwise, we will not have enough liquidity in the market and the price will increase. It is unclear whether a voluntary system can work at all. Using a voluntary system, we will not get a level playing field. Within a mandatory system, the proactive actors of all sectors receive incentives to reduce emissions, not the free riders as in sectoral voluntary agreements. Using voluntary agreements creates wrong incentives for free-riders.
We need absolute targets.
For the global climate only absolute
targets are relevant. This was the main reason Kyoto set absolute targets.
Only absolute targets can give governments the certainty that a fixed amount
will be met by the business sector. It is also much easier for the public
to understand that an environmental target – an absolute target – will
be translated into a business target. Only an absolute target creates an
anti-cyclic incentive for businesses: They must show more climate activities
in boom phases and less in difficult times. This is intelligent climate
policy.
Most of us think that it is important that the EU proposal did not include project-based trading from the beginning. The directive is and should be a policy and measure directive for the EU. If at all, such trading could only be acceptable if an additional (to UNFCCC) golden standard was applied to projects accepted in the EU.
As it is currently stated in the EU Commission's proposal for the ET directive, businesses cannot be allowed to buy AAUs, in other words, to buy hot air. This would destroy the environmental credibility of the ET System. And: the ET System would not become an incentive system for climate friendly innovation in Europe.
Gerd Timm
Executive Director
BUND
Brigitte Kunze
Executive Director
GERMANWATCH
Jochen Flasbarth
President
NABU
Regine Günther
Head of Climate and Energy Policy
WWF-Germany