After Paris climate pact, EU must do more to push up the carbon price and drive clean growth, argues Prince of Wales Corporate Leaders Group
By Megan Darby
Brussels is not doing enough to deliver on its climate rhetoric, heads of 23 major European businesses have warned.
After agreeing to bold climate goals at December’s UN summit in Paris, the EU should follow with radical reforms to its carbon market. That is the view of the Prince of Wales Corporate Leaders Group (CLG), which represents multinationals including Coca-Cola, Unilever and Jaguar Land Rover.
It called on the European Commission to reduce the cap on pollution permits faster and close loopholes that weaken ambition.
Philippe Joubert, chair of the group, said: “The Paris Agreement was finalised by all nations right here in Europe.
“Now Europe’s policy makers have the chance to follow through on their commitments by decisively reforming the EU ETS [emissions trading system] so that it truly plays its role in driving behaviour change, cutting carbon and transforming the EU economy for the future.’’
The intervention comes ahead of a public hearing in the European Parliament on proposed changes to the ETS. On Thursday, lawmakers on the environment committee will quiz experts ranging from green campaigners to steel lobbyists.
For the multinationals in the CLG, the plans do not go far enough to spur investment in a low carbon economy.
The EU’s flagship climate policy, its ETS covers 45% of greenhouse gas emissions. Power generators and heavy industry must hold enough carbon allowances to account for their emissions, trading between themselves as needed.
But generous handouts to energy intensive firms combined with the financial crisis has resulted in a glut of excess permits, depressing the cost.
From a high of nearly €30 a tonne (US$33) in 2008, the carbon price has fallen below €5.
Businesses need a more “robust” price to underpin clean investments, the CLG argued – and that requires deeper reforms.
Jill Duggan, senior associate at the Cambridge Institute for Sustainability Leadership and former official involved in designing the ETS, said it had been shown to work.
“It’s not perfect, but now is the time to strengthen the system and make it truly world-leading, not weaken it with exceptions and low expectations,” she said.