Comment by Mathew Carr (CarrZee)
By raiding its store of carbon allowances to help it deal with war, the European Union has shown it can be very pragmatic indeed.
The move, WHICH I UNDERSTAND MIGHT YET BE REVERSED, has been criticised for damping EU carbon prices and, therefore, hurting the climate.
That’s because lower carbon prices increase the incentive to burn coal, natural gas and other dirty fuels covered by the emissions-trading market, easily the world’s biggest by traded volume.
Journalist Alessandro Vitelli does a great job showing some of the ins and outs here. See note 1 below too, for a snip of his wisdom.
I reckon the EU is realising it needs to show a little love to fossil-fuel companies as it edges them out of the economy between now and about 2040 / 2050.
Demonizing the fossil fuel industry won’t work.
We need it until we can finish replacing it. So let’s show it some love.
Others need to get this message too.
Extinction Rebellion’s “too much anti-fossil fuelness” is misplaced.
You shouldn’t go saying everyone who works for a fossil fuel company is somehow bad, because you are probably today using the dirty old product created by those companies. It’s hypocritical.
In energy networks, clean and dirty products get mixed together. Even if you are on a 100% renewable power tariff, some of the electrons that actually drive your toaster have been generated by natural gas.
See this LinkedIn post for an example of misguidedness:
“In April, XR’s TruthTeller team went to Shell’s HQ to ask employees to #JumpShip. Inspired by our action, Shell’s senior safety consultant has today made the leap.
Watch the video resignation Caroline Dennett sent to over a thousand Shell colleagues explaining her decision to quit and asking them to also walk away if they can.
Shell is doing extreme harm to the planet as it continues to invest in fossil fuel exploration and extraction, she says. “And I can no longer be a part of it.”
The social licence is fast expiring for greenwashing companies like Shell, which claim to be moving into renewables while continuing to invest in massive new fossil fuel projects. Their employees now face a stark choice between watching their CVs turn toxic or walking away.
As Caroline says in the video: “The fossil fuel industry is the past. If you can find a way out, please walk away while there’s still time.” https://lnkd.in/ekPHvei8 “
I believe the United Nations needs to get the “love not hate” message, too.
This is also misplaced:
Working for oil companies is no bad thing.
Saying so will help the continuing global climate negotiations proceed more smoothly, because Middle East economies, for instance (and even fossil-fuel states like the USA), need to be brought on board.
The fossil fuel industry needs really clever people working for it, so the transition over the next 30 years runs smoother (and faster).
Anyway, it’s not just about the fossil-fuel industry. The whole global economy is feeding off climate inaction.
As reported here, the EU is indeed walking a fine line, arguably creating tension with its own member states.
But, because it has forward-looking and credible industrial climate policy in place, it’s in a good position to deal flexibly with its transition vs nearly everywhere else on earth.
Countries should be following the EU.
Collaboration — even with fossil fuel companies, countries and workers — is key to moving forward to a cleaner world at a faster pace.
Last week the European Commission announced its intention to bring roughly 200-250 million EUAs out of the Market Stability Reserve (MSR) and auction them to raise €20 billion for the Recovery and Resilience Facility (RFF).
The sales will help to fund a €200 billion effort to end Europe’s reliance on Russian fossil fuels and to speed up even further the transition away from carbon intensive energy.
To say the market was surprised is an understatement. EUA prices dropped more than 7% on the news and went on to fall as much as 17% in the next week.
Among the trading community there was a chorus of very unhappy voices lamenting what seemed to be a totally discretionary act of sabotage, coming as it did less than a day after the European Parliament’s environment committee (ENVI) had approved amendments to the “Fit for 55” EU ETS reform package.
To be clear, the Fit for 55 reforms are aimed at raising Europe’s climate ambition to reach a 55% emissions cut by 2030. To do this, the EU ETS cap will be reduced through a one-time adjustment in the cap, the linear reduction factor (the annual cut in the cap) will be raised, benchmarks will be tightened and free allocations will be phased out earlier.
However, the market, seemingly unanimously, feels that the Commission’s plan to sell upwards of 200 million additional EUAs – that were expected to be invalidated in 2024 – from the MSR represents a move in the opposite direction, a watering down of that higher ambition.
At this week’s IETA European Climate Summit in Barcelona, there was a great deal of discussion about the proposed MSR sales, much of it philosophical in nature, and it seems worthwhile to set down some of the main points that were raised….continues