ETS, you in danger girl
At first glance, it might look like Meloni's idea to suspend EU climate policy in response to the Iran War was shot down on Thursday. But the wording in the conclusions opens up future possibilities.
As Spanish Prime Minister Pedro Sanchez entered Thursday’s European Council summit in Brussels, he made clear how he felt about Italian Prime Minister Giorgia Meloni’s proposal to suspend the EU’s Emissions Trading System (ETS) in response to the impacts of the American-Israeli attack on Iran.
“Unfortunately, some governments are using this crisis and the rise in electricity prices to weaken and undermine climate policies,” he told reporters. “In Italy, Germany, and France, prices were above €100 per megawatt-hour, that is no coincidence.”
“Spain is showing how commitment to renewables ensures our citizens, our industries and our businesses are experiencing less of an impact from gas prices,” he said. “This is strategic autonomy, this is defending Europe’s interests.” He said Spain was “on the right side of history”, noting that cleantech is not ideological but is being developed to protect households, stabilise markets and reduce dependence on foreign energy.
Giorgia Meloni, on the other hand, entered the summit repeating her call for a full suspension of the ETS, the bedrock of all EU climate policy. Her attack on the ETS has been joined by nine Eastern European member states (coincidentally, almost identical to the list of EU countries in which same-sex marriage is still illegal). Not all of those Eastern countries, however, agreed with Meloni that the ETS should be completely suspended – the letter they signed only called for an urgent revision.
As the summit began, it was clear that Western European leaders were not going to let Meloni destroy EU climate policy by suspending the ETS. "Without the ETS we would be importing billions in fossil fuels," the new Dutch prime minister Rob Jetten told reporters. Nordic leaders also came in explicitly defending the ETS, as did French President Emmanuel Macron. She may be the most powerful woman in Brussels right now in terms of setting the direction of EU policy, but it was clear from the start that on this issue Meloni’s idea was dead in the water.
Experts have warned that if you suspend the ETS, the EU is left with no climate policy (I’ll explain why below). And they reacted with relief to the Council’s firm rejection of the suspension idea. “The extensive attacks on the EU’s Emission Trading Scheme have been contained at the European Council,” said Linda Kalcher, Executive Director of the consultancy Strategic Perspectives, on Friday. “What sounded like a political thunderstorm a month ago is now giving way to a more grounded reality. A majority of leaders have set the record straight: the energy price hikes have been caused by Europe’s costly and unreliable dependence on fossil fuels, not by climate policies. Immediate relief measures can only happen at the national level, as any reform of the carbon pricing scheme will inevitably take several months.”
Nevertheless, experts I’ve spoken with have remained uneasy about language that Meloni was able to insert into the Council conclusions that suggest she is still going to be able to kill the ETS, either through a review coming in July or by taking national action to distort the carbon price. The idea of using the ETS as a short-term fix has not died. The final conclusions released late Thursday night state: