In a move that may sound the final death knell for the European Emission Trading Scheme (ETS), the European Parliament last month rejected a proposal to change the timing of emission allowance auctions. Many industry lobbyists are sure to rejoice at its demise. Should environmentalists be doing the same thing?

The proposal, which came from the European commission, sought to postpone the auctioning of 900 million allowances in order to allow the market to adequately recover. In this way, carbon prices, which have become almost worthless, could regain some sort of value. However, with a difference of just 3% of the vote (47% to 44%), MEPs ensured that no back-loading life jacket was to be thrown to the ailing scheme.

Most environmentalists, along with the majority of even not-so-keen observers would agree that the scheme is flawed. So, what is to be done? Save it or scrap it? The environmental community itself is not wholly in agreement.

Following the vote in the Parliament, Green Party MEP Bas Eickhout blamed his centre-right colleagues for failing to address the problem that they helped create.  It is precisely because of centre-right politicians in Europe that the emissions trading scheme was established as a flawed market, with various loopholes, which have led to the situation we are in today. By opposing necessary steps to fix these problems they have caused, they are effectively signalling their desire to destroy the EU’s flagship climate change policy.

He urged for fundamental changes to the system. “The time for tinkering is now clearly over. … The Commission must urgently come forward with more fundamental structural solutions, notably on permanently retiring emissions allowances to address the oversupply, and not simply postponing the auctioning of permits. In addition to retiring at least 1.4 billion allowances, there is also a need to introduce a linear emissions reduction factor of 2.5% per year. Ultimately, stepping up the EU’s outdated emissions reduction target to at least 30% by 2020 is necessary to properly rescue the ETS.”

However, it was not only right-leaning politicians who didn’t step forward to help rescue the ailing scheme. Irish Socialist MEP Paul Murphy abstained from voting on the issue. In the view of his party, the ETS has always been beyond saving. He names it as a “neoliberal, market-driven concept, incapable of transforming the European economy into a low emission economy” which, in his view, actually achieves the opposite of its purported aim. “By providing big polluters with a green cover while not providing any incentives for them to break with fossil fuels and transform our energy sector.” MEP Murphy is not alone. One hundred NGOs, including Friends of the Earth, have signed a petition called ‘Time to Scrap the ETS’ which would support the sentiment of his argument.  

Other commentators still, such as David Roberts writing for, would support neither the reformism of Eickhout nor the resignation of Murphy. Though a supporter of the ETS, he is not necessarily in favour of back-loading, noting that our obsession with carbon prices is misguided.  “It can be reformed but our goal shouldn’t be to tweak short-term carbon prices, rather our concentration should be on targets.”

Irish environment minister Phil Hogan, who is steering talks among Member States while Ireland holds the presidency of the EU, would not agree. “The immediate need to address the carbon price issue in the ETS remains a clear priority,” he states.

As the debate rolls on, for now, the issue goes back to the environment committee in the European Parliament for reconsideration.


Aoife O’Grady is an Irish, Brussels-based journalist focusing on environmental issues.

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