07 Jun
2006 - Brussels, Belgium – The European Emission
Trading Scheme (EU ETS) will not be responsible
for major job losses or for a reduction of EU
competitiveness, says a new report commissioned
by WWF. Compared to other policy instruments to
achieve Kyoto compliance, the EU ETS – Europe’s
key instrument to tackle climate change – is the
cheapest option and can have positive effects
on competitiveness.
WWF, the global conservation
organization, commissioned the Centre for European
Economic Research (ZEW, Germany) to analyse all
scientific studies and models available on ETS
impacts on competitiveness and employment. The
analysis shows that dire warnings about devastating
ETS impacts as expressed by companies and industry
associations from various sectors lack justification.
“Most industry propaganda about
negative ETS impacts is scaremongering, based
on misconception and misinformation," said
Stephan Singer, Head of WWF’s European Climate
and Energy Policy Unit.
“Industries like steel, chemicals
and coal keep crying wolf and paint an economic
doomsday scenario. But we know that a sound cap
and trade regime won’t harm Europe’s competitiveness.”
Given the EU’s legal obligation
under the Kyoto Protocol, a “do nothing” alternative
is not an option. The report shows that emission
trading is the most cost-effective regulation
method in comparison with other policy instruments,
such as an eco-tax. If countries were required
to reach their Kyoto targets without the flexibility
to engage in any emission trading, this would
result in a substantial increase in costs.
With regard to ETS impacts on
employment, the report suggests that aggregated
job losses will barely be visible, even compared
to scenarios without EU regulation to reduce emissions.
If economic ETS impacts are compared to impacts
of other policy instruments to reach Kyoto targets,
ZEW rates the EU ETS among the best choices.
“At worst, ETS impacts on employment
and competitiveness are modest but smaller than
impacts of alternative regulation to stop climate
pollution,” added Singer. “Now we must focus on
stronger caps and structural changes to improve
the overall efficiency of the scheme. In principle,
a cap and trade system like the EU ETS is the
most economic tool we have to achieve deep cuts
in CO2 in the industrial sector.”
In tapping its huge innovation
potential, WWF believes that the EU ETS can have
two positive effects at relatively low cost: significant
contributions to CO2 reductions and structural
change in various sectors to make Europe ready
for a low carbon future.
