29th Sep 2022

Netherlands warns against EU carbon credit sell-off

  • Dutch finance minister Sigrid Kaag:'European policies to counter high energy prices should not come at the expense of the [green] transition' (Photo: Wikimedia)
Listen to article

EU energy ministers are set to meet on Friday (9 September) to discuss skyrocketing energy and gas prices and ways to quickly replace Russian gas flows, which have been drastically reduced since last year.

As part of a broader strategy, the European Commission has said countries could sell more carbon allowances to industry — which would allow factories and power plants to pollute more.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

This could raise €20bn, which could then be used to invest in renewable energy, overseas liquified natural gas, or it could be used to finance support policies for vulnerable households.

But in a non-paper sent to Dutch parliament on Tuesday evening (6 September), finance minister Sigrid Kaag warned against such a measure, saying it would "undermine" European efforts to reduce carbon emissions by 55 percent before 2030.

"European policies to counter high energy prices should not come at the expense of the [green] transition," she said at an event hosted by think tank Bruegel on Tuesday.

For years the price of carbon was at rock bottom, due to an oversupply of carbon credits. But in recent years, the system has become more effective as allowances have been gradually phased out. This has led prices to increase, incentivising the industry to emit less.

But with Russian gas flows almost completely cut off, power producers have been switching to more-polluting power sources such as oil or coal, forcing them to buy more carbon credits.

Increasing allowances would bring down the price slightly, but Kaag warned this could undermine a system which has become the centrepiece of EU efforts to reduce carbon emissions.

Germany and Denmark have also opposed freeing up more allowances as it would increase pollution.

The Dutch government has now suggested selling permits due to be sold later this decade, which could raise €10bn.

The number of allowances on the market until 2030 will remain the same, but will be slightly higher now compared with the current roadmap and then phases-out more speedily from 2026 onwards.

"No increase in emissions is to be expected as the cumulative available allowances are not changed," the non-paper (a an unofficial document sometimes used during EU negotiations) states.

The other half of the money could be taken out of the innovation fund, which is designed to support green technology.

MEPs raise ambition on EU carbon market reform

MEPs on the environment committee agreed on reform of the European carbon market — including expanding it to buildings and transport. They also want to extend the scope of the carbon border tax, and phase out free permits by 2030.

EU watchdog: no proof of carbon market manipulation

The EU watchdog has found no proof of manipulation of the carbon markets, allaying European Commission fears. However, the European Securities and Markets Authority did note that it had only limited access to essential data.

Activists slam tweak to EU carbon allowance scheme

Ahead of EU environment ministers' meeting, environmental groups sent a joint letter urging ministers to "uphold the 'polluter-pays' principle, as enshrined in EU law when reforming the Emissions Trading System."

News in Brief

  1. EU takes Malta to court over golden passports
  2. EU to ban Russian products worth €7bn a year more
  3. Denmark: CIA did not warn of Nord Stream attack
  4. Drone sightings in the North Sea 'occurred over months'
  5. Gazprom threatens to cut gas deliveries to Europe via Ukraine
  6. New compromise over EU energy emergency measures
  7. 15 states push for EU-wide gas price cap
  8. EU: Nord Stream explosions 'result of a deliberate act'

Stakeholders' Highlights

  1. The European Association for Storage of EnergyRegister for the Energy Storage Global Conference, held in Brussels on 11-13 Oct.
  2. EFBWW – EFBH – FETBBA lot more needs to be done to better protect construction workers from asbestos
  3. European Committee of the RegionsThe 20th edition of EURegionsWeek is ready to take off. Save your spot in Brussels.
  4. UNESDA - Soft Drinks EuropeCall for EU action – SMEs in the beverage industry call for fairer access to recycled material
  5. Nordic Council of MinistersNordic prime ministers: “We will deepen co-operation on defence”
  6. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries

Latest News

  1. Everything you need to know about the EU gas price cap plan
  2. Why northeast Italy traded in League for Brothers of Italy
  3. How US tech giants play EU states off against each other
  4. Deregulation of new GMO crops: science or business?
  5. The European shipping giants plying Putin's fossil-fuels trade
  6. Russian ideologue and caviar on latest EU blacklist
  7. Netherlands tops EU social safety net for the poor
  8. New EU rules to make companies liable for their AI failures

Join EUobserver

Support quality EU news

Join us