EU to launch ‘adjacent’ carbon market for transport, buildings

"The advantages of the ETS are it will deliver you to the [climate] target, it will incentivise the right players in the system, and it will create revenues to guarantee a just transition," said Diederik Samsom. [andreas160578 / Pixabay]

A senior EU official on Tuesday (11 May) defended European Commission plans to extend the bloc’s carbon market to road transport, arguing that revenues generated could be used to offset the effects of higher fuel prices on the poorest in society.

Diederik Samsom, the chief of staff of EU climate chief Frans Timmermans, suggested that an “adjacent system” to the current Emission Trading Scheme (ETS) – the EU’s carbon market – would be established for road transport and buildings.

A review of the ETS will officially be unveiled on 14 July as part of a broader package of legislation aimed at reaching the EU’s tougher climate goals for 2030.

And even though the EU executive refuses to confirm the ETS extension to transport and buildings, Samsom’s remarks are in line with previous comments from the European Commission.

Timmermans previously said he was personally against including road transport in the ETS because it risks pushing up fuel prices and hurt the poor disproportionately.

But Samsom vigorously defended the plans, citing three reasons why it would make sense.

“The advantages of the ETS are it will deliver you to the [climate] target, it will incentivise the right players in the system, and it will create revenues to guarantee a just transition,” he argued.

“Those are the three reasons that we are seriously considering extending the ETS to road and also to buildings, because exactly the same logic applies to buildings,” said Samsom, who was speaking at a webinar organised by French MEP Pascal Canfin.

EU carbon market will be extended to buildings and transport, von der Leyen confirms

Europe will apply its emissions trading scheme to buildings and transport, European Commission President Ursula von der Leyen told a summit of world leaders on Thursday (22 April), setting the stage for the EU’s planned overhaul of its carbon market.

€40 billion a year

According to Samsom, the ETS expansion could bring in €40 billion a year, over half of which would accrue from road transport.

This, he said, represents an advantage over stricter emissions standards for vehicles, which are favoured by environmentalists because they put the pressure on manufacturers instead of consumers.

While both options are likely to increase fuel costs, the ETS extension generates new revenue which could be used to soften the hike in fuel prices, he argued.

The ETS road extension, he explained, would be aimed at big fuel producers and importers, and act as  an incentive to decarbonise fuel.

“Refineries, importers, are going to think about the best possible way – the most efficient, cost effective way – to decarbonise their fuel as fast as possible, or better as fast as is authorised by the cap-and-trade system,” he said.

Critics argue that the extension of ETS to road transport could backfire, harming consumers and undermining popular support for climate action.

Monique Goyens, the director general of BEUC, a European consumer organisation, said the ETS extension could “lock low-income consumers into fossil fuels” and undermine the consensus for tackling climate change.

“We believe this is a high-risk and low-reward measure, because it hits hardest the lowest income consumers without offering them any solution, any sustainable mobility alternative,” said Goyens.

Instead, Goyens argues that the focus should be placed on increasing fuel emission standards on cars. “Putting ETS before standards is like putting the cart before the horse – we need to do it in the right order,” she added.

EU carbon market not the right policy for cars, says Timmermans

Road transport should not be top of the list when the European Union expands its carbon market into new sectors, the bloc’s climate policy chief said on Tuesday (8 September).

Greens prefer a fuel tax

Green NGO Transport & Environment also favours standards, arguing the ETS should primarily be considered as a revenue raising instrument rather than a means to significantly cut emissions.

“There’s a lot to be said about the ETS, but in essence this is a fuel tax – a fuel tax through qualified majority voting,” said William Todts, Executive Director of T&E.

Todts argued that the money gained from the ETS could be used to pay people a “climate dividend”.

“We give people the money back that we tax them on fuel, and then they are free to do what with that money what they want, and hopefully they’ll spend less of it on fuel and more of it on other things, produced in Europe,” he said.

Industry representative Eric-Mark Huitema, director general of car manufacturers’ lobby ACEA, warned that increasing fuel prices by even one euro could spark protests similar to those seen in France and other parts of Europe in 2018, when a green tax on diesel led to violent protests by the so-called ‘gilets jaunes’ (yellow vests).

“I saw a study in Germany that if you would raise the diesel price or the fuel price by one euro, your transition will be at pace with what you want. But one euro more on fuel price will certainly bring yellow vests – even in Germany – onto the streets. So, I think that is not the best solution,” he said.

“The best solution is we [car manufacturers] work on lowering the cost of a new electric car and we are doing that,” he added.

Huitema expressed concern that the green transition risks leaving some Europeans behind, as access to clean vehicles is currently out of the financial reach of many.

“When I hear Frans Timmermans say this is a transition we all have to go through and we leave no one behind, I think we really have to focus on the people who cannot afford a brand new luxury car or a small electric car, which is more expensive than the current small petrol car,” he said.

Road transport in the EU ETS: A high-risk, low-reward strategy

The Emissions Trading Scheme (ETS) is not a good instrument to cut road transport emissions because it will raise petrol prices and fuel popular discontent, as seen in the past with the ‘Gilets Jaunes’ protests, writes William Todts. Road emissions …

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