An ETS for transport and buildings is essential

(EurActiv, 14 Jun 2021) An EU-wide emissions trading system for the transport and building sectors would secure the financing of low-carbon solutions and support lower-income households and member states through the redistribution of carbon pricing revenues, argue Matthias Buck and Andreas Graf.

Matthias Buck is director of European energy policy at Berlin-based think tank Agora Energiewende. Andreas Graf is project manager EU energy policy at Agora Energiewende.

For the European Union to achieve 55% emission reductions by 2030, it is clear it needs both more demanding EU standards in all sectors and carbon pricing in order to shift economic incentives from polluting to clean activities.

Why? Because standards alone will not be enough for member states to reach their increased 2030 effort sharing targets as they do not address operating expenditures, rebound effects or the need to accelerate the phase-out of existing assets. Because a carbon price helps secure the financing of the transition by supporting the business case for low carbon solutions and lowering the need for public subsidies. And because a targeted and mindfully progressive redistribution of carbon pricing revenues will ensure that solidarity and fairness are reflected not only in empty words, but also in significant financial commitments to support lower-income households and member states.

Today, Europe’s climate and energy laws address transport and buildings emissions only through national targets and standards that are riddled with flexibilities and loopholes. And the EU’s weak and outdated instrument for setting minimum energy prices for fossil fuels – the Energy Taxation Directive – has proven nearly impossible to reform since 2003 due to unanimity voting requirements in the Council. Meanwhile, national carbon pricing systems covering buildings and transport are still far too rare and have occasionally been watered down or frozen under political pressure.

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EurActiv, 14 Jun 2021: An ETS for transport and buildings is essential