EXCLUSIVE / Two former British Tory environment ministers, Tim Yeo and John Gummer, have called on rebellious Conservative MEPs to support an effective carbon market in a key European Parliament vote in Strasbourg today (16 April), because it is “what Margaret Thatcher would want”.
British Prime Minister David Cameron supports an EU plan to boost carbon prices by backloading – or withholding – 900 millions of allowances from auction, but most Tory MEPs in the European Conservatives and Reformists group (ECR) are opposed.
The vote, which could determine the future of Europe’s Emissions Trading System (ETS), is currently thought too close to call.
MEPs say that a previous attempt by the centre-right European People's Party to stage the vote tomorrow (17 April) was called off when they realised that many British Conservative MEPs would be in London that day for Thatcher’s funeral.
But a rumour has spread that the vote could still be swung by UK MEPs in the ECR bloc leaving Strasbourg early to remember their leader at home.
Yeo, the environment minister between 1992-1993 and current chairman of the UK’s energy and climate change committee, expressed quiet satisfaction at the prospect.
“It would be fitting because she was the first head of government to recognise the science of climate change almost 25 years ago,” he told EurActiv. “She was ahead of her time in that respect and I think she would have favoured market mechanisms as a good way of addressing the problem so if the timing of that funeral leads to this vote going through, there is something fitting about that.”
'The carbon market is a free market'
Speaking over the phone from London, Gummer, the Baron of Deben, who served as an agriculture minister under Thatcher before becoming environment secretary, went further.
“She wanted to ensure that all solutions were free-market solutions and of course the carbon market is a free market solution and exactly the kind that she wanted, so anyone who calls themselves a Thatcherite should certainly be in favour of an effective carbon market,” he said.
“The whole purpose of what we are trying to do is have a market solution to a global problem called climate change,” he added. “It is exactly what Margaret Thatcher would want. She was determined to succeed in a free market way and this is a free market way.”
Thatcher’s political legacy is a vexed matter within the Conservative Party, where issues of European regulations are concerned.
In the 1980s and 1990s, Yeo and Gummer were both identified as ‘wet’ One Nation Tories by an emerging eurosceptic bloc within the Conservative Party, which saw itself as heir to the legacy of a hero who had been ungratefully deposed by pro-European party members.
Climate change does not respect borders
“The fact of the matter is that the EU has led the battle against climate change and the environment is one of those issues which is universally felt to be better handled on a European basis, even by those who are euroscpetic, for obvious reasons,” said Gummer.
“The climate does not stop at national boundaries,” he added. “Mrs Thatcher saw that absolutely clearly.”
Gummer points out that Thatcher was a scientist who recognised the reality of climate change early on, and persuaded the US President George Bush to go to the first Rio conference on sustainable development in June 1992.
Many environmentalists dispute Thatcher’s green credentials, because of the harmful effects of her privatisation and deregulation agenda. They say she championed North Sea oil, and soon lost interest in climate change after a Green Party electoral surge waned.
But in 1989, she told the UN general assembly: “It is mankind and his activities that are changing the environment of our planet in damaging and dangerous ways. The result is that change in future is likely to be more fundamental and more widespread than anything we have known hitherto.
Thatcher called for a coordinated response from the whole international community.
“This is one of the most remarkably prescient views she had,” Gummer said. “She was a continuing and whole hearted supporter of Britain taking the lead in the battle against climate change. She didn’t want the whole issue to be captured by those who wanted centralist and Marxist solutions.”
Today’s carbon market vote in a Strasbourg plenary is expected to see diehard free marketers lining up with members of the far-left GUE/NGL group, who are opposed to market-based solutions for climate change.
Dutch Green MEP Bas Eickhout said that the vote would be so tight that the GUE anti-ETS faction could “absolutely” swing the final result.
“They never liked the market mechanism so the idea that you can trade pollution on the market is not worth supporting from their position,” he said. “It makes it interesting as in all respects they are going to form a front with true market believers.”
Yeo added: “The fact that people who take a dogmatic and unscientific view of the climate change problem may find themselves with strange bedfellows [among] some rather fringe elements should make people think twice.”
EurActiv was unable to contact any MEPs from the GUE/NGL but a new report released yesterday (15 April) by the Corporate Europe Observatory argued from a similar position that the ETS could not be reformed and should not be replicated.
The paper contends that the scheme has failed to cut carbon emissions – which only fell briefly during the ETS’s Phase II due to economic recession – and has instead transferred climate funds towards big polluters in the shape of free allowances to pollute.
This view is supported by evidence such as a Wikileaks US government cable from 2008, which claimed that none of the $25 billion worth of carbon market projects in India could be considered “additional” to what would have happened anyway.
British businesses have invested billions of pounds in mitigating and adapting to climate change, and the British government will soon be establishing a carbon price floor.
The mechanism is viewed ambivalently by climate policy makers on the continent for its potential to overlap with and disrupt the ETS. But if the EU’s backloading proposal is defeated today, some businesses fear that the subsequent collapse in carbon prices could leave the UK exposed to ‘carbon leakage’.
“It is certainly true that the malign consequences of the carbon price floor will be made worse if this motion for backloading is rejected,” Yeo said.
With a turnover that reached around €90 billion in 2010, the EU's Emissions Trading System is the world's largest carbon market. Around 80% of it is traded in futures markets and 20% in spot markets.
The ETS aims to encourage companies to invest in low-polluting technologies by allocating or selling them allowances to cover their annual emissions. The most efficient companies can then sell unused allowances or bank them.
The scheme has proved influential. Australia’s is due to begin carbon trading in 2015, Thailand and Vietnam have both unveiled plans to launch ETS’s, China is due to launch pilot schemes across several provinces this year, and India will ring the bell for trading on an energy efficiency market in 2014. Mexico and Taiwan are also planning to introduce carbon markets.
- 2014: India due to begin energy efficiency trading
- October 2014: Thailand due to launch a voluntary emissions market
- 2015: South Korea due to begin emissions trading
- 2018: EU and Australia due to link emissions trading schemes
- 2020: Phase III of EU ETS due to begin
- DG Climate: Structural Reform of the ETS
- DG Climate: Carbon market reform press release
- DG Climate: Q&A - Emissions Trading
- DG Climate: EU ETS
- DG Climate Action: ETS Legislation