Brussels wants to raise 20 billion euros to finance the EU’s exit from Russian energy by selling excess permits for carbon emissions – a move that risks hitting the bloc’s climate targets, making burning fossil fuels cheaper.
The European Commission is considering auctioning off part of the Emissions Trading Scheme’s certificates, EU officials and diplomats told the Financial Times. Permissions allow their users to emit more carbon.
The Commission has a plan for Europe to invest about 200 billion euros by the end of the decade to try to move away from dependence on Russian energy by investing in new infrastructure and alternative supplies.
However, one of the consequences of bringing more certificates to market will be a reduction in the price of carbon, which will cause controversy among some EU member states because it will reduce the cost of using coal, oil and gas. This would achieve the emission reduction targets in the so-called European Fit for 55 plan.
“Filling the market with ETS certificates will only increase emissions and make the target approach to 55 even more difficult to achieve. This is a bad climate policy, ”said one EU diplomat.
Brussels’ RepowerEU energy plan, due to be released on Wednesday and still subject to change, says renewables are the best way to tackle climate change and achieve energy independence but that the EU will also need fresh fossil fuels to reduce its dependence on Russia.
The commission’s strategy will also identify measures to save energy, diversify fuel supplies from Russia and increase investment in clean energy as part of the pursuit of greater self-sufficiency.
The EU wants to phase out Russian fossil fuels by 2027, but this attempt is causing political disagreement and is difficult to project. Efforts to impose an oil embargo on Russia have been halted because member states cannot agree. Landlocked countries, such as Hungary, want more time to reduce their demand for Russian oil.
The commission’s plan calls for the sale of 200 to 250 million ETS certificates from the so-called Market stability reserve. The reserve has grown since the founding of the ETS in 2009 because renewables have been deployed faster than expected, and slow growth has hampered industrial activity and thus emissions.
The commission has not sold certificates so as not to reduce the price of emissions, and now has a reserve of 2.6 billion.
Brussels believes that replacing Russian gas will require the temporary use of alternatives such as LNG and coal, which have higher carbon emissions. Brussels says it can still achieve its goal of reducing emissions by 55 percent from 1990 levels by 2030.
“You can be sure that if this commission proposes such a measure, it is done after a very careful analysis and with full respect for the necessary emission reductions set out in the climate law,” said a commission spokesman.
Some Member States may push the commission to ensure that fewer certificates will be issued in the future to ensure that mandatory climate targets are met.
Claude Turmes, Luxembourg’s energy minister, said: “We can’t go back to more fossil fuels. You need to make sure we don’t cut the total carbon budget by 2030.
“We need to use the current crisis to accelerate our work on renewable energy and energy efficiency to move towards our climate goals.”
Matthias Buck, European director of Agora Energiewende, said the plan would lead to increased emissions. “These are emissions that would never have happened without this plan. This is good news for Polish and German coal-fired power plants, which may run longer. ”
The commission declined to comment.