EU ETS, renewables not behind energy hikes: Timmermans

Market: Emissions
14/09/21

Faced with increasing energy prices, the EU should speed up rather than slow down the transition to renewable energy, said European Commission vice-president Frans Timmermans.

He told the European Parliament that only one-fifth of the recent increases in the region's energy prices is due to higher prices for EU emissions trading system (ETS) allowances.

"Now we have a discussion about the price hike in the energy sector. Only about one-fifth of the increase can be attributed to CO2 prices rising. The others are simply a consequence of a shortage on the market," said Timmermans, who oversees the commission's work on climate and energy policy. "Had we had the Green Deal five years earlier, we would not be in this position because then we would have less dependency on fossil fuels and on natural gas."

Timmermans was defending, before the European Parliament, the package of measures put forward by the commission in July aimed at reducing greenhouse gas (GHG) emissions in the bloc by 55pc by 2030 compared with 1990 levels.

"All these measures have a price effect," said Timmermans. "The art of politics will be to ensure that the price effect does not affect the most vulnerable." He called for members not to be "paralysed" by the fear of change and to ensure the EU "evenly spreads" the burden in society.

"The prices for renewables have stayed low and stable. Instead of being paralysed or slowing things down because of the price hike in the energy sector, we should speed things up in the transition to renewable energy," he added.

Also addressing parliament, Slovenian foreign minister Anze Logar said Europe should "lead by example" even if some countries are still increasing emissions.

"[UN climate conference] Cop 26 in Glasgow will be a test of our collective commitment to fulfil the long-term temperature goal of the Paris agreement," said Logar, referring to the deal's aim to limit global warming to 1.5°C against pre-industrial levels. He added the EU will emphasise the need to keep within the 1.5°C goal and Slovenia, which chairs discussions among EU member states on the legislative proposals, has an "ambitious" programme to agree the legislation required for 55pc GHG cuts by 2030.

Speaking for parliament's largest group, the centre-right EPP, German member Peter Liese said "yes" to the commission's proposals and a market approach to emissions reduction, but called for improvements including measures to boost synthetic fuel consumption in cars. "I'm unambiguously for the ETS proposals and the Social Climate Fund," said Liese.

Dutch socialist Mohammed Chahim called for a "severe" revision of the ETS including reform of the system of free allowance allocations, progressive energy taxation, and climate-minded support measures for consumers. Socialists welcomed the package but warned against cherry picking from the measures.

General support also came from the liberal chair of the environment committee Pascal Canfin. "But we are very suspicious of one element of the climate plan — the extension of the ETS to housing and road transport. The political costs are very high and the climate impact is very low," said Canfin. He noted his political group is already working on alternatives to this ETS extension.

Green vice-president Bas Eickhout, vice-chair of the environment committee, called for ensuring a coal phase-out by 2030 and an end to fossil fuel subsidies. "Surplus certificates from CO2 emissions trading must be taken out of emissions trading," Eickhout added.

Polish conservative Anna Zalewska, speaking for parliament's ECR group, wants to work further on ETS reform. "The ETS is unjust at the moment. There's a lot of speculative transaction" that drives energy prices higher, she said.

By Dafydd ab Iago

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