Revision of Directive (EU) 2003/87/EC - EU Emission Trading System (ETS)

Carbon Market Watch and signatory organisations argue that the European Commission's proposal for the EU ETS revision fails to apply the 'polluter pays principle' by continuing free pollution permits. They contend that free allocations have stagnated industrial decarbonisation, noting that over 200 billion euros in allowances have been distributed since 2008 while emissions reductions remained below 0.4% annually since 2013. The document calls for full auctioning of allowances to internalise carbon costs and generate revenue for clean technology, warning that the Commission's plan for 5 billion free allowances between 2021 and 2030 could represent a subsidy of approximately 400 billion euros at current prices.

• The current EU ETS framework heavily relies on free emission allowances for industry, with more than 95% of industrial emissions currently covered by them, despite auctioning being the default rule.
• Free allocation of allowances is linked to stagnant industrial decarbonisation; since 2013, greenhouse gas emissions from energy-intensive industries have seen an annual reduction of less than 0.4%, whereas the power sector, which has limited free allocation, saw emissions drop by 29% in the same period.
• Since 2008, over 200 billion euros worth of free emission allowances have been distributed to energy-intensive industries.
• The European Commission's proposal for the period between 2021 and 2030 includes 5 billion free emission allowances, which, at a CO2 price of 80€/ton, could equate to a pollution subsidy of approximately 400 billion euros.
• A 2020 report by the European Court of Auditors confirms that the practice of free allocation tends to slow down the process of industrial decarbonisation.

APA

Frank, S. (2021). Revision of Directive (EU) 2003/87/EC - EU Emission Trading System (ETS). Carbon Market Watch. https://carbonmarketwatch.org/wp-content/uploads/2021/12/20211214_Letter-to-Environment-Council.pdf

Chicago

Frank, Sabine. Revision of Directive (EU) 2003/87/EC - EU Emission Trading System (ETS). Carbon Market Watch, 2021. https://carbonmarketwatch.org/wp-content/uploads/2021/12/20211214_Letter-to-Environment-Council.pdf.

Wikipedia

{{cite press release |last1=Frank |first1=Sabine |title=Revision of Directive (EU) 2003/87/EC - EU Emission Trading System (ETS) |publisher=Carbon Market Watch |date=16 December 2021 |url=https://carbonmarketwatch.org/wp-content/uploads/2021/12/20211214_Letter-to-Environment-Council.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{frank2021revision, author = {Frank, Sabine}, title = {{Revision of Directive (EU) 2003/87/EC - EU Emission Trading System (ETS)}}, publisher = {Carbon Market Watch}, year = {2021}, month = dec, url = {https://carbonmarketwatch.org/wp-content/uploads/2021/12/20211214_Letter-to-Environment-Council.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }