Flemish government urges EU to lower ETS prices

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BrusselsReport.eu
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Jan Jambon, Minister-President of the Government of Flanders (Copyright: Geert Renckens, CC BY 3.0 , via Wikimedia Commons )

At the end of August, European Union Commission President Ursula von der Leyen rejected a demand by the Polish government to temporarily suspend the EU’s Emission Trading System (ETS) in order to stabilise power prices.

Polish PM Mateusz Morawiecki had specifically stated:

“Why add another €90 or €100 in the form of ETS allowances to already very high electricity prices? We can revert back to the system the moment we secure energy for all of Europe and we bring back peace to Ukraine”.

According to von der Leyen, the ETS costs were contributing only to around 6% of the electricity price, versus 94% that was caused by other factors – mainly, the surging price of gas.

Other estimates have put this at 10 percent of the electricity price or even 13 percent. In Poland, it would constitute 23% of households bills.

To motivate her stance, von der Leyen commented:

“We need the emission trading system to cut CO2 emissions”.

Already in January, the Polish government had requested to suspend the ETS system, which can be described as a domestic European climate tax on producers, and therefore on consumers, as it forces power plants and industries to buy permits when they produce CO2 emissions. Then, it received support from the Czech government.

Now, the government of the Belgian region of Flanders, which accounts for 80 percent of Belgian exports and 60 percent of its population, has made a similar proposal.

In a letter with the subject “Rising energy prices», written by Jan Jambon, Minister-President of the Government of Flanders, “expressing the viewpoint of the Government of Flanders concerning the abovementioned subject”, addressed to von der Leyen, the Flemish government warns that “the situation for both households and businesses risks to become untenable in the lead-up to the winter season.»

It adds “we invite the Commission to present new proposals aimed at reducing gas prices in Europe» but the Flemish government adds the following to this about ETS:

“We call for temporary measures to address the high carbon prices. This could be achieved by auctioning additional allowances from the market stability reserve, in line with recent proposals of the European Commission and the European Environment Council. However, these proposals should be strengthened and swiftly come into force. Furthermore, the decision to cancel large amounts of allowances in the market stability reserve should be reversed in order to be able to cope with such emergency situations in the coming years.»

Meanwhile, intense negotiations at the EU level are ongoing to extend the number of economic sectors that are subject to the ETS system. The European Parliament has for example demanded to include maritime transport as well, and that all flights departing from the EU would fall under the ETS – not just inter-EU flights as is the case currently. It also wants to see free allowances given to airlines to reduce their ETS costs scrapped by 2025.

In Full: Letter by the Minister-President of the Government of Flanders to the President of the European Commission:

Dear President van der Leyen,

President of the European Commission Ursula von der Leyen

European Commission Wetstraat 200

1049 Brussel

While we are still recovering from the economic and social impact of the COVID-19 crisis, we once more face a major challenge. Over the past months we have all been confronted with rising energy prices. The situation for both households and businesses risks to become untenable in the lead-up to the winter season.

The government of Flanders already supports both its citizens and its businesses in their efforts to cut energy use. At the same time we invest heavily in the diversification of energy supplies and the development of renewable energy sources. However, these efforts will not suffice when confronted with the current gas and electricity prices. Therefore the Government of Flanders urges the European Commission to propose additional measures on the EU level in order to mitigate the recent price hikes.

First of all, we invite the Commission to present new proposals aimed at reducing gas prices in Europe, and consequently lowering them to levels comparable with other regions in the world. The current difference in energy prices has an enormous impact on the competitiveness of European companies. We hope for a European approach on energy pricing mechanisms that assures both affordability and availability.

Additionally, we call for temporary measures to address the high carbon prices. This could be achieved by auctioning additional allowances from the market stability reserve, in line with recent proposals of the European Commission and the European Environment Council. However, these proposals should be strengthened and swiftly come into force. Furthermore, the decision to cancel large amounts of allowances in the market stability reserve should be reversed in order to be able to cope with such emergency situations in the coming years.

Yours Sincerely

Jan Jambon

Minister-President of the Government of Flanders

Flemish Minister for Foreign Policy, Culture, Digitization and Facilities

The letter can also be downloaded here: 2022.09.05 Letter Flanders to Pres. EUCOM

 

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