Welcome to Carbon Countdown, a podcast by Carbon Market Watch covering all things carbon pricing and climate action
Episode 3: How the heavy industry is profiting from the EU carbon market
Music: Ambient Technology by Joystock – https://www.joystock.org, Parade by Nctrnm, Matthew McGilvery – https://nctrnm.bandcamp.com
Europe’s industrial sectors made up to 50 billion euros between 2008 and 2019 in windfall profits from the EU Emissions Trading System (EU ETS). This means that instead of making polluters pay, the carbon market is paying them. The subject is topical, as the carbon market rules will soon be revised as part of the upcoming climate law package known as ‘Fit for 55’.
In this episode, Sander de Bruyn, Program Manager of Environmental Economics at CE Delft and the lead author of a new study “Additional profits of sectors and firms from the EU ETS 2008-2019” explains how these profits occurred. Most of them were made through so-called cost pass-through whereby companies pass the “cost” of freely obtained allowances in the product price. According to Sander, although companies deny doing this, arguments such as the traditional opportunity show the opposite.
Mohammed Chahim, Member of the European Parliament for the Socialists and Democrats Group questions the position of parliamentarians that defend free allowances to heavy polluters. Mr Chahim considers free allowances to be a type of subsidies that should be rapidly phased out in case the EU introduces a Carbon Border Adjustment Mechanism.
Lastly, Sam Van den plas, Policy Director at Carbon Market Watch underlines that a more robust policy framework to deliver industrial decarbonisation is needed, as the current pace at which industrial emissions are reduced is not compatible with any net-zero climate goals. He questions the EU Commission’s plans to make citizens pay more for their carbon pollution in transport and buildings sectors if the heavy industry is at the same time let off the hook. While it is clear that energy-intensive industries will need support to transition to climate neutrality, policymakers have to strike a better balance between carbon leakage protection that benefits the heavy industry and better climate protection that benefits society at large, he concludes. | 
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