The economic crisis, which has shut down manufacturers, idled factories and left lorries and ships with fewer products to transport, has rendered the EU’s flagship climate change policy, the emissions trading scheme “obsolete,” according to fresh research out on Friday (10 September).
The recession has produced such a reduction in CO2 that companies across Europe have managed to pocket a slew of unused emissions permits which had been handed out based on economic forecasts produced before the crisis that predicted strong growth that never happened.
Like an employee rolling over unused holiday allowances to the next year, companies are going to be able to roll over these unused pollution permits to the next phase of the ETS, and use them when business turns around, meaning that only a very tiny amount of reductions will happen until as late as 2016, according to a report by Sandbag, a UK-based research group specialising in emissions-trading analysis.
The group’s analysis has found that the ETS over the 2008-2012 period will result in a savings of just 32 million tonnes of emissions out of the 1.9 billion tonnes emitted annually.
The ETS permits all unused permits to be carried over to the 2013-2020 phase of the scheme.
As a result, although the policy covers a full 12,000 different installations across Europe, regulating the emissions of a single power station would have produced a greater impact, according to the report’s authors.
And this is the optimistic scenario, as it assumes a quick European economic recovery – to 2008 levels by 2011. A slower recovery would mean that the ETS would provide no constraint on emissions at all.
“The recession has rendered the ETS caps thoroughly obsolete,” said Sandbag campaigner Damien Morris.
“Unless they are adjusted to reflect our new circumstances, the EU ETS risks becoming an albatross around the neck of European climate policy.”
The European Commission for its part conceded that the group had the numbers right.