Microsoft Word - FoEE_ETS_Final

The document critiques the EU-ETS for its failure to deliver necessary CO2 cuts due to over-allocation of permits, price volatility, and the use of offsetting. It argues that the system has become a profit-making tool for industry while increasing energy costs for consumers. Friends of the Earth Europe proposes replacing or supplementing the EU-ETS with binding national climate laws, mandatory energy savings targets, higher renewable energy goals, and a shift toward CO2-based taxation and direct public financing for emissions reductions.

• The EU-ETS has failed to achieve necessary emissions reductions due to the over-allocation of permits. In the 2005-2007 trial phase, the cap was 8.3% higher than verified 2005 emissions, and in the 2008-2012 phase, 17 of 27 member states had 2012 caps higher than their 2005 emissions levels.
• The system's price volatility acts as a deterrent to green investment. Permit prices have fluctuated wildly, ranging from over €30 to as low as €0.03 per ton in December 2007, creating an unpredictable environment for those investing in energy efficiency and renewables.
• Free allocation of permits has allowed energy companies to generate windfall profits by passing CO2 costs to consumers despite receiving credits for free. This contributed to wholesale electricity price increases of 30% in Germany and France, 50% in Scandinavia, and over 80% in the UK.
• Offsetting through the UN's Clean Development Mechanism (CDM) allows EU companies to avoid domestic emissions cuts. The report highlights a specific scandal where the destruction of HFC-23—a potent greenhouse gas—incentivises companies in India and China to increase production of the gas to earn credits.
• The EU-ETS is viewed as an obstacle to more effective policies. Industry lobbying uses the existence of the ETS to argue against the implementation of binding national climate laws and mandatory energy efficiency targets.
• Carbon taxation is proposed as a more transparent and stable alternative to cap-and-trade. The report cites Sweden, which introduced a carbon tax in 1991 that rose from €28 to over €100 per ton, resulting in emissions that would otherwise be 20% higher.
• The report suggests redirecting EU structural and cohesion funds—which totaled a projected €344 billion for 2007-2013—toward energy savings and renewables, particularly in Central and Eastern Europe, to reduce dependence on Russian energy.

APA

Friends of the Earth International (n.d.). Microsoft Word - FoEE_ETS_Final. https://www.foei.org/wp-content/uploads/2020/12/FoEE_ETS_Oct2010.pdf

Chicago

Friends of the Earth International. Microsoft Word - FoEE_ETS_Final. n.d. https://www.foei.org/wp-content/uploads/2020/12/FoEE_ETS_Oct2010.pdf.

Wikipedia

{{cite report |author=Friends of the Earth International |title=Microsoft Word - FoEE_ETS_Final |url=https://www.foei.org/wp-content/uploads/2020/12/FoEE_ETS_Oct2010.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{friendsoftheearthinternationalndmicrosoft, author = {{Friends of the Earth International}}, title = {{Microsoft Word - FoEE\_ETS\_Final}}, institution = {Friends of the Earth International}, url = {https://www.foei.org/wp-content/uploads/2020/12/FoEE_ETS_Oct2010.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }