The EESC welcomes the ambition to accelerate and raise the reduction of CO2 emissions in order to comply with the objectives set in the European Climate Law and the European Green Deal and fully supports the overarching objective of a 55% CO2 reduction by 2030 and a carbon neutral economy by 2050.
The EESC is supportive of the proposed measures and for that reason also sees it as extremely important that the problems inherent in the envisaged transition are addressed and resolved in an adequate manner. This, in our opinion, is a fundamental condition for success.
It is therefore important that the potentially negative effects of the proposed measures on the competitiveness of European industry and service providers, both in carbon intensive sectors and in general, are analysed very carefully and measures are taken in order to prevent, as far as possible, negative effects on the economy and negative social effects such as unemployment, energy poverty or mobility poverty.
The EESC takes note that the resources available for upskilling and reskilling and for the solution of negative social effects following from the ETS proposal will depend on the fate of proposals still pending before the co-legislators, including the creation of a Social Climate Fund. The EESC, while approving these proposals as such, still questions whether the resources available will be sufficient even if the financing proposals were approved without significant amendments.
It is also necessary to consider the way climate issues are dealt with worldwide and to avoid divergences that may put European business at a disadvantage. The EESC refers in this connection to its opinion on the Carbon Border Adjustment Mechanism (CBAM), among others.
The accelerated pace and the high ambition level of CO2 reductions and reduced availability of greenhouse gas allowances will mean higher costs for all sectors covered by the ETS system. While some sectors will be protected by the CBAM (Carbon Border Adjustment Mechanism), this will negatively influence competitiveness on the world market unless a substantial number of states follow the EU lead, which is still not known. Measures to support exports may be required and the EESC points to the need to find efficient solutions that are compatible with the WTO framework, to which end the European Commission should take immediate political action. In addition, all of the EU's bilateral trade agreements need to be modified accordingly.
The EESC also questions whether the increased cost level provoked by the modifications of the ETS may have negative effects on the prospects of recovery following the COVID-19 crisis.
EESC draws attention to the fact that maritime transport is one of the sectors where CO2 reduction is particularly difficult and costly on the 2030 horizon, but that the sector has nonetheless indicated that it will achieve climate neutrality by 2050. The European Commission should look into whether the planned inclusion of maritime transport might provoke a general price increase on emission allowances with repercussions on all ETS sectors.
The EESC welcomes in principle the proposal to extend the applicability of the ETS to third country vessels and to journeys from and to third country ports, but nevertheless draws attention to the ongoing work within the IMO (International Maritime Organization) to reach a global solution with respect to maritime transport emissions and encourages the EU to actively work toward the achievement of an IMO solution.
Regarding the chosen solution for extending ETS to buildings and road transport in the form of a parallel system with fuel distributors as trading subjects, the EESC notes that the main impact on those responsible for buildings, transport operators or owners of passenger cars will be a price signal, to the extent that the fuel distributor allows the trading costs to influence the fuel price with considerable effects on households/consumers and companies.
Since in this instance the actors subject to ETS are not the actual actors in the sectors concerned – that is, road transport or management of buildings – but fuel distributors, the possibilities of those in the sector concerned to influence their situation is very limited and, in many cases, non-existent. What is introduced is a price signal, with similar effects to, for instance, a tax increase. The usual added value of the ETS system is therefore largely absent.
Effects of the extension to road transport may be particularly strong on households which, for financial or other reasons, cannot choose an electric or alternative fuel vehicle or for heavy duty transport where, in particular regarding long distance transport, so far, no real alternatives to fossil fuels are available.
With regard to the extension to road transport, the EESC notes that this measure was decided against the sceptical views of the private sector, trade unions and NGOs. These views seem to have carried little weight compared to those of private citizen and academia. As legislation is a political process with societal effects, the EESC takes the view that broad consideration of effects on society, including economy and employment, should be key in that decision making.
The EESC draws attention to the fact that EU domestic navigation, buildings and road transport will remain subject to the Effort Sharing Regulation (ESR) and that ETS results in those sectors will count towards Member States' efforts to meet the ESR obligations. The transport sector is also affected by emissions standards, and the buildings sector by energy efficiency provisions, and both are additionally affected by the Renewable Energy Directive. The EESC therefore points to the need for the Commission and Member States to deal with the interface between the systems in a smooth and transparent manner.
The EESC approves the proposal to adjust volumes and improve stability and foreseeability regarding the Market Stability Reserve. Likewise, the EESC welcomes the creation of a Market Stability Reserve including with respect to emission trading for road transport and buildings.