During yesterday’s European Council, EU leaders met to discuss the new energy shock hitting Europe, with some of them looking towards deregulation measures and major changes to the EU Emissions Trading System (ETS) as possible solutions.
For now, the worst seems to have been avoided on that front, but we’re not out of the woods yet. Too many still fail to recognise that weakening the ETS is not only ill-suited to tackling the immediate crisis, but will undermine efforts to address the real problem: Europe’s ongoing dependence on fossil fuels.
WWF notes that energy price shocks are not unusual nor accidental. Price spikes are a built-in feature of a fossil-fuel-based energy system, which repeatedly exposes European households and businesses to sudden increases in costs. The recent price spikes have already cost the EU an estimated €6 billion extra in fossil fuel imports, equivalent to the investment needed for wind energy serving about two million households.
“Another energy crisis, another reminder that with a fossil-based energy system price spikes are a feature not a bug. And that families and businesses are the ones who pay the price for Europe’s fossil fuel dependency. Most EU leaders seem to believe that the solution to the problem is to accelerate the transition to wind and solar. But at the same time too many still think we just need more fossil fuels, or from different places. That strategy hasn’t worked out too well for us so far” said Alex Mason, Head of Climate and Energy at WWF EU.
One of the key tools in the transition away from expensive and unreliable fossil fuels, the ETS, was heavily criticised in the last days by certain EU leaders who seek to use this crisis to ask for either a pause or to weaken the system. While this scenario was avoided, their concerns were heard in the Council conclusions, asking the European Commission to come up with targeted measures to mitigate the effect of the ETS on the electricity price. This is yet another attempt of the EU to push for deregulation, which threatens Europe’s long-term competitiveness, security and public health.
WWF warns that weakening the EU ETS would be a mistake and supports the Member States, businesses and NGOs who spoke out against this. The carbon market provides long-term certainty for investors and raises funds that help European industries move away from fossil fuels while staying competitive globally.
“Blaming the Emission Trading System for high energy bills is a misfire, or more accurately, it is friendly fire. The EU ETS guides investments into more efficient processes like electrification, making Europe less reliant on fossil fuels. For more than two decades, it has helped reduce emissions, channel billions into cleaner technologies and made Europe less dependent on coal. It encourages innovation, supports industry in its decarbonisation pathway, and helps Europe build the clean technologies it needs to stay competitive in the future,” said Camille Maury, Senior Policy Officer on Industry Decarbonisation at WWF EU.
WWF urges EU leaders to stay the course and to not weaken reforms to the EU ETS agreed only a few years ago. Doing so would damage investor confidence and deliver little real relief to businesses. Instead, EU governments should be looking at how to accelerate the transition to renewable energy and reduce Europe’s dependence on volatile fossil fuel markets once and for all.
