Saving emissions trading from irrelevance

This Policy Paper is a contribution of Stephen Tindale (CER), to the project Think Global – Act European (TGAE). Thinking strategically about the EU’s external action directed by Notre Europe  Jacques Delors Institute (report available in May 2013, dir. Elvire Fabry, Senior Research Fellow, Notre Europe – Jacques Delors Institute).

Stephen Tindale, Associate Fellow, Centre for European Reform ? Uncontrolled climate change is the greatest risk that humanity faces. The main burden will fall on developing countries, particularly in sub-Saharan Africa. But Europe and its residents will also be damaged in many ways, including extreme weather, heat waves, and the spread of tropical diseases.

Climate change is a quintessentially global challenge. If pollution shifts from one part of the world to another – from Europe to China, for example – the global climate is no better off.

The main EU climate policy, the Emissions Trading System, now stipulates such a low carbon price that it has become essentially irrelevant. The European Commission should propose a Europe-wide carbon price floor of €30 per tonne, high enough to influence investment decisions and encourage energy efficiency and low-carbon energy supply. The Commission should also propose border tax adjustments, with the revenue returned to the country of origin.