According to an analysis by the World Wildlife Fund (WWF), over the past nine years, the EU has provided large polluting companies with almost 100 billion euros in the form of free permits for carbon dioxide emissions. Free quotas directly contradict the “polluter pays” principle, WWF said.
€98.5 billion worth of free pollution allowances were granted to energy-intensive sectors, including steel, cement, chemicals, and aviation, between 2013 and 2021. This is more than the €88.5 billion paid by polluters (mainly coal and gas-fired power plants) for CO2 emissions under the EU’s Emissions Trading Scheme (ETS).
In addition, as WWF points out, the free permits have not been accompanied by climate benefits such as improved energy efficiency, and some polluters have also been able to make billions in profits by selling the permits they did not use.
The European Commission describes ETS as “a cornerstone of the EU’s policy to combat climate change and a key tool for curbing greenhouse gas emissions cost-effectively.” The number of carbon emission permits is decreasing annually, which in recent years has led to an increase in the price of permits and incentives for companies to reduce emissions.
Carbon emissions covered by the ETS have fallen by 37% since its inception in 2005, largely due to the growth of renewable energy. But WWF said free allowances undermined ETS and emissions from the heavy industry did not fall. The analysis also showed that at least a third of the revenues received from STVs were not spent on climate action, and if we exclude projects to increase the efficiency of burning fossil fuels, this share increases to almost half.