EU ETS? Success or Fail Flashcards
What are some reasons why the EU’s Emissions Trading System (ETS) has been hailed as successful?
The EU’s ETS has been hailed as successful for several reasons. It drives innovation through financial incentives, providing a framework that encourages industries to reduce their emissions. It also allows industries with particularly difficult emission reduction challenges to continue operating by providing flexibility in meeting their targets. The ETS has resulted in a 40-45% reduction in emissions from firms, contributing to overall emissions reduction efforts. Additionally, the EU plans to include the shipping, road transport, and building sectors in a new trading system by 2027. A significant amount of the new allowance trading system’s revenue, estimated at $65 billion, will flow into a newly established social climate fund.
What are some arguments against the success of the EU’s ETS?
Critics argue that the EU’s ETS has not been as successful as it could be for various reasons. Firstly, the ETS does not apply to all sectors, such as agriculture, which limits its overall impact. Another concern is that the ETS ignores other environmental concerns, focusing solely on greenhouse gas emissions. There have been instances of over-allocation of permits, which means that there is an excess of emission allowances due to a lack of perfect information. This has led to questions about the effectiveness of the system. Additionally, the ETS may disadvantage smaller firms as they may struggle to compete with larger firms. There have also been issues of mis-reporting and corruption in the ways that firms reported their emissions, with reports suggesting that up to 90% of firms in some nations mis-reported their emissions.
