Open letter to ENVI committee: Time to vote for an EU Emissions Trading System (ETS) that works for climate and industrial transformation

An open letter from multiple environmental and industrial organisations calling for the EU ETS to be strengthened by increasing reduction factors, eliminating free allowances for industry and aviation, and reinvesting auction revenues into the green transition. The authors argue that free allocation creates market failures and windfall profits while slowing decarbonisation, and they specifically oppose the creation of a Carbon Leakage Protection Reserve in favour of the Carbon Border Adjustment Mechanism (CBAM).

• The current system of free EU ETS allowances is described as a market failure that disincentivises rapid industrial decarbonisation and benefits incumbent companies by favouring inefficient production over circular economy models.
• Free allowances have resulted in significant financial gains for energy-intensive industries without delivering corresponding emission reductions; specifically, they generated EUR 50 billion in windfall profits between 2013 and 2019.
• The authors argue that the European Commission's proposed ambition for the EU ETS is insufficient to meet the 1.5°C target of the Paris Agreement and call for an increase in the one-off reduction and the linear reduction factor.
• The letter advocates for the full auctioning of allowances, noting that in 2021, free allocation cost 676 million allowances, while the Modernisation and Innovation funds received only 69 million and 40 million allowances respectively.
• The document opposes the establishment of a Carbon Leakage Protection Reserve, arguing it would compromise industrial transformation and damage the credibility of the Carbon Border Adjustment Mechanism (CBAM).

APA

Carbon Market Watch (2022). Open letter to ENVI committee: Time to vote for an EU Emissions Trading System (ETS) that works for climate and industrial transformation. https://carbonmarketwatch.org/wp-content/uploads/2022/05/FINAL_Open-letter-to-ENVI_Free-allowances.pdf

Chicago

Carbon Market Watch. Open letter to ENVI committee: Time to vote for an EU Emissions Trading System (ETS) that works for climate and industrial transformation. 2022. https://carbonmarketwatch.org/wp-content/uploads/2022/05/FINAL_Open-letter-to-ENVI_Free-allowances.pdf.

Wikipedia

{{cite press release |author=Carbon Market Watch |title=Open letter to ENVI committee: Time to vote for an EU Emissions Trading System (ETS) that works for climate and industrial transformation |date=4 May 2022 |url=https://carbonmarketwatch.org/wp-content/uploads/2022/05/FINAL_Open-letter-to-ENVI_Free-allowances.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{carbonmarketwatch2022open, author = {{Carbon Market Watch}}, title = {{Open letter to ENVI committee: Time to vote for an EU Emissions Trading System (ETS) that works for climate and industrial transformation}}, publisher = {Carbon Market Watch}, year = {2022}, month = may, url = {https://carbonmarketwatch.org/wp-content/uploads/2022/05/FINAL_Open-letter-to-ENVI_Free-allowances.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }