A recent report by Carbon Market Watch (CMW) has revealed a concerning trend among the EU’s top 30 emitters, referred to as the “Emissions Aristocracy”. These companies, operating in sectors such as power generation, steel, cement, oil refinement, and petrochemicals, collectively contribute to 50% of the emissions accounted for by the EU Emissions Trading System (EU ETS). The report highlights how these companies are not paying for their greenhouse gas (GHG) emissions, instead benefiting from free allowances.
The EU ETS, launched in 2005, is a crucial component of the European Union’s fight against climate change. It is the world’s premier and most extensive transnational emissions trading initiative, designed to curb GHG emissions and fulfill climate objectives and global agreements like the Paris Agreement. However, the CMW report reveals that the EU ETS allows an “Emissions Aristocracy” to pollute without bearing the financial burden. Lidia Tamellini, a policy expert at CMW and the report’s author, emphasizes that these already profitable companies are granted free allowances, leaving the planet and society to carry the cost.
While the power sector pays for its pollution, the CMW investigation found that companies in sectors such as steel, cement, and petrochemicals, among the top 30 polluters, receive significant amounts of free pollution permits. These businesses are dominant players in their respective sectors, and the top 30 emitters alone account for over 50% of the EU ETS emissions in 2022, despite comprising less than 1% of total covered companies. This highlights the need for greater accountability and action from these companies in addressing the climate crisis.
The report reveals that major contributing sectors face minimal pressure for swift emission reductions within the EU carbon trading mechanism. Furthermore, these sectors received approximately €47.6 billion in free allowances in 2022, undermining efforts to fund innovative technologies, support vulnerable households and small businesses, and mitigate climate change. Prominent companies such as RWE, ArcelorMittal, ThyssenKrupp, and HeidelbergCement are featured in the report, highlighting the continued use of free allowances hindering the decarbonization path of the European economy.
Carbon Market Watch advocates for a more robust EU ETS that aligns with achieving climate neutrality by 2040. This includes phasing out free allowances for heavy industries and implementing an auctioning system ahead of the current plan, which extends free allocation until 2034. The European Commission must establish stricter regulations for major emitters to ensure genuine accountability and responsibility for polluting. Closing the loopholes in the EU ETS is essential, as the Emissions Aristocracy has had it easy for too long. The CMW report sheds light on the urgent need for accountability and stronger decarbonization strategies within the EU’s emissions landscape.