By signing the Paris climate agreement, many countries vowed to keep the global temperature rise below two degrees centigrade. The emissions trading scheme is the most important European instrument in battling climate change.
But if the current policies are maintained, the emissions from businesses that are currently affected by the Emissions Trading System will only -in the best case- be zeroed out around the year 2058. This level of ambition does not correspond with the targets set in the Paris agreement. To keep the global rise in temperature below two degrees centigrade, the global emission of CO2 should already be zero in 2050. In Europe those industries targeted by the EU’s Emissions Trading System should already emit zero CO2 in 2040. These industries can reduce their CO2 emissions reasonably simply and inexpensively.
The limit for emissions thus should be lowered. From 2021 to 2030 the distributed of permits will decrease at a rate of 2.2 per cent per year. This means that every year 2.2 per cent less carbon credits are issued. The limit should be lowered with 2.8 per cent to reduce CO2-emissions to zero in 2050. A percentage of 4.2 is essential for getting industries falling under the Emissions Trading System to produce zero CO2 emissions in 2040.
Simply put: the emissions trading scheme should be made 'Paris proof'. And that's possible. Remember, a relatively small number of companies is responsible for the largest part of the CO2-emissions in Europe. Given the targets set in the Paris agreement, it is only logical to stimulate these companies to invest in environmental-friendly technologies right now.