Regulated by the Directive on emissions trading in 2003, the European Commission stated that the European Union’s Emission Trading System (EU ETS) has become the most effective tool for cutting greenhouse gas (GHG) emissions.
In a nutshell, the EU’s ETS covers around 45 per cent of total EU GHGand remains the world largest carbon market today. In its legislative proposal of July 2015, the Commission argues that the EU’s Nationally Determined Contributions (NDC) for the Paris Agreement will ensure the effectiveness of its ETS. Overall, the goal set by the Commission is to reduce at least 43 per cent of the GHG emissions by 2030 compared to 2005 levels.
However, the EU ETS only encompasses the industrial and power sectors. There are other carbon producing sectors not covered by the EU’s ETS such as building, transport, waste, and agriculture. The EU together with its member states should find other effective mechanisms for reducing emissions in these sectors.
In fact, Eurostat figures suggest that between 1990 and 2016, the Union’s energy use was reduced by almost 2 per cent, whereas member states lowered its GHG emissions by 22 per cent. The EU still has half-way to go in order to reach the target of 2030.
Looking at the Union’s approach in international development, the EU has already implemented a foreign policy of financing climate change programmes in developing countries. The Commission reported that the EU, its member states and the European Investment Bank together are the biggest contributors of public climate financing to developing countries, giving 20.4 billion euro in 2017 alone. This contribution makes the EU one of the largest donors to climate change programmes nowadays.
Finally, combining internal and external policies on climate change would help the EU fulfill its commitment to the Paris Agreement. In this case, the EU’s ETS should not stand alone – especially against the backdrop that the United Kingdom will likely leave the Union’s emissions trading scheme after Brexit.
*Published in the European Future Observer, Vol. 7 no.2, June 2019
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