The European Commission has released its long-awaited proposal to revise the EU Emissions Trading System (ETS), and as many feared, it is not good news for the planet. The Commission confirmed it will allow industry to emit greenhouse gases such as CO2 well beyond 2039, effectively extending pollution into 2044. At the same time, it unveiled an Electrification Action Plan aimed at accelerating the transition to renewable energy.
Linear reduction factor lowered to ease constraints
A key component of the ETS is the linear reduction factor (LRF), the annual rate at which emission caps decline. Under the previous system, the LRF was set at 4.4 percent between 2031 and 2035, aiming to reach zero emissions by 2039. With the new proposal, the LRF drops to 3.7 percent for 2031-2035 and is further reduced to 1.7 percent per year after 2036. This means industrial emissions will continue well into the 2040s, representing a capitulation to industry pressure as critics have pointed out.
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Free allowances extended to 2038 and option to buy external offsets
In addition to modifying the LRF, the Commission decided to extend free carbon allowances for several years longer than originally planned. Sectors covered by the carbon border tax will continue to receive these allowances until 2038. Moreover, starting in 2036, companies will be allowed to buy carbon offsets from outside the EU. This mechanism risks lowering offset prices and enabling industry to continue polluting at lower costs, undermining climate efforts.
Surprising timing despite soaring oil prices
The decision to weaken emission rules comes at a time when geopolitical events have pushed oil prices to very high levels. The Commission justified the move by stating that EU industries are under increased pressure due to the geopolitical and economic context. "The review will bring relief to industry, while preserving the essential role of the ETS in the climate and energy transition," an official statement read. However, the WWF expressed strong skepticism: "How does the Commission intend to compensate for these additional emissions while still meeting the 2040 target?" asked Camille Maury of WWF, emphasizing that any increase in ETS emissions would need to be offset by deeper cuts elsewhere in the economy.
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Electrification plan insufficient without decarbonization
Alongside the ETS update, the Commission published the Electrification Action Plan to accelerate the shift from fossil fuels to green energy. Measures include modernizing electricity bills, lowering upfront costs for electrification technologies, speeding up grid deployment, and encouraging innovative solutions. The WWF welcomed the plan but warned that electrification alone is not enough. "Every heat pump installed, house insulated, or industrial process electrified powered by renewables brings the EU closer to a future with cleaner air, lower energy bills, and less fossil fuel dependence," said WWF's Arnaud Van Dooren. "But electrification must be paired with ambitious renewable energy and energy efficiency targets."
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The EU's new climate policy marks a significant step back from commitments made under the Paris Agreement. While China accelerates AI development with models like Moonshot-2, Europe risks falling behind also on climate, with Italian SMEs potentially bearing the cost. Meanwhile, the EU continues to pressure tech giants like Google, compelling them to share data and open platforms to rival AI. But on climate, the direction seems opposite: more emissions, less ambition.
Source: https://www.engadget.com/2217325/eu-defangs-key-pillar-of-its-climate-policy-to-allow-more-pollution
