Citizens' Climate Europe
CCEU
Citizens' Climate Europe is a non-partisan organization advocating for climate solutions through carbon pricing and revenue recycling.
Lobbying Activity
Meeting with Pär Holmgren (Member of the European Parliament)
27 Nov 2025 · EU Emissions Trading System (EU ETS)
Meeting with Tiemo Wölken (Member of the European Parliament)
24 Nov 2025 · ETS II, Social Climate Fund
Meeting with Carola Rackete (Member of the European Parliament)
8 Nov 2024 · options to work together and support
Meeting with Annalisa Corrado (Member of the European Parliament) and European Environmental Bureau
2 Oct 2024 · Social Climate Fund and ETS2
Meeting with Olivia Gippner (Cabinet of Commissioner Wopke Hoekstra)
11 Sept 2024 · Emissions trading system
Response to Approvals of unilateral extensions of ETS2 scope and corresponding additional allowances
14 Aug 2024
Citizens Climate Europe (CCEU) is the European branch of Citizens Climate Lobby (CCL), a global, non-partisan organisation that advocates for Climate Income, a policy also known as Carbon Fee and Dividend. CCL is composed almost entirely of volunteer citizen lobbyists. CCL has civil society status at the G7, the G20, the UNFCCC, the World Bank, and is also a founding strategic partner of the Carbon Pricing Leadership Coalition, which brings together leaders from government, industry and civil society to investigate and promote carbon pricing. In Europe, CCEU engages EU-level bodies as well as national governments via national CCL chapters. CCEU is in the transparency register 111734132634-17 and is a member of the EU Expert Group on ETS2 implementation. The policy we advocate for has three pillars which support each other: a steadily rising price on all greenhouse gas emissions; recycling of revenues to citizens to make the carbon price fair and politically sustainable; and a carbon border adjustment mechanism. Viewed through this lens: * We fully support the extension of the ETS2 to additional sectors in Austria and, consequently, the approval of corresponding additional allowances. * We note that, as Austrian authorities and the Commission point out, inclusion of these additional sectors will reduce administrative costs due to the existing national framework. We note that an economy-wide carbon price as we advocate has low administrative costs. * We emphasise that pricing emissions in ETS II in sectors listed in Annex III to Directive 2003/87/EC and in the additional sectors to be approved will - to varying extent - increase costs to end consumers. This reinforces the case for direct income revenue recycling, we would therefore strongly support the extension of the existing Klimabonus scheme to ETS II to make ETS II fair and supported by citizens.
Read full responseResponse to Approvals of unilateral extensions of ETS2 scope and corresponding additional allowances
14 Aug 2024
Citizens Climate Europe (CCEU) is the European branch of Citizens Climate Lobby (CCL), a global, non-partisan organisation that advocates for Climate Income, a policy also known as Carbon Fee and Dividend. CCL is composed almost entirely of volunteer citizen lobbyists. CCL has civil society status at the G7, the G20, the UNFCCC, the World Bank, and is also a founding strategic partner of the Carbon Pricing Leadership Coalition, which brings together leaders from government, industry and civil society to investigate and promote carbon pricing. In Europe, CCEU engages EU-level bodies as well as national governments via national CCL chapters. CCEU is in the transparency register 111734132634-17 and is a member of the EU Expert Group on ETS2 implementation. The policy we advocate for has three pillars which support each other: a steadily rising price on all greenhouse gas emissions; recycling of revenues to citizens to make the carbon price fair and politically sustainable; and a carbon border adjustment mechanism. Viewed through this lens: * We fully support the extension of the ETS2 to additional sectors in the Netherlands and, consequently, the approval of corresponding additional allowances. * We note that, as Dutch authorities and the Commission point out, inclusion of these additional sectors will reduce administrative costs due to the existing national framework. We note that an economy-wide carbon price as we advocate has low administrative costs. * We emphasise that pricing emissions in ETS II in sectors listed in Annex III to Directive 2003/87/EC and in the additional sectors to be approved will - to varying extent - increase costs to end consumers. This reinforces the case for direct income revenue recycling, we would therefore strongly support an introduction of Climate Income (essentially Austrian Klimabonus scheme) in the Netherlands to make ETS II fair and supported by citizens.
Read full responseMeeting with Eero Heinäluoma (Member of the European Parliament)
5 Mar 2024 · Green Deal
Meeting with Elisabetta Gualmini (Member of the European Parliament)
24 Feb 2023 · ETS in Italy - Meeting by APA
Response to Fitness check of how the Polluter Pays Principle is applied to the environment
9 Dec 2022
Citizens Climate Europe is focused on climate solutions using the Polluter Pays Principle (PPP). Carbon or more generally emissions pricing, if sufficiently ambitious, follows the PPP and can achieve fast, fair, and effective climate change mitigation. This letter describes how emissions pricing in the EU can be better aligned with the PPP. How effective PPP is and factors hampering effective application. Whether EU policymaking could be more efficient incorporating PPP. EU ETS covers approximately 40% of domestic GHG (including a substantial share of free allowances). EU ETS2 would cover approximately 40% more. This leaves a significant gap. Moreover, effective carbon price levels are far too low to realise the full potential of this policy instrument. Recent updated estimates of the social cost of carbon indicate average externalities and unpriced future welfare losses of 185 USD/ton CO2e (https://doi.org/10.1038/s41586-022-05224-9) or higher if the Preventative Insurance Principle is applied. Together, current ETS coverage and free allowances, the current average ETS carbon price level represents only a fraction of what it should be in accordance with the PPP. Moreover, existing fossil fuel subsidies are limiting the effectiveness of emissions pricing, thus further weakening the PPP. Confidence in the effectiveness of individual overlapping policies is hard to determine (e.g. between ETS and RED, EED, ESR). However, there are a number of economic principles that underlie effectiveness: + Predictability and transparency of price. + Maximum coverage. + Adequacy and uniformity of net pollution price, after subsidies and exemptions. (See: OECD FASTER Principles, Economist consensus, IMF, WEF, IPCC, IEA, CPLC) Translation of these principles into policies is hampered by political challenges including the requirement for unanimity to achieve tax-based pricing. These could be addressed in the medium term with: + Replacing unanimity requirement with qualified majority voting. + Enhanced cooperation between ambitious MS, to change the negotiating dynamic, demonstrate the benefits and create a different incentive for consistency. (eg. Klimabonus) + Reducing the access and influence allowed by the polluting industry with legislators. Targeted adjustments of existing or under review legislation could strengthen the PPP: ETS/ETS2 + Steadily rising floor price so businesses and consumers can plan and invest. + Increasing coverage by including remaining sectors. + Increasing coverage by ending free allowances (earlier CBAM introduction, WTO-compliant export rebates). ETD + Align ETD with a steadily rising price for all EU GHG emissions. + ETD could be used to set a floor price within the ETS and ETS2. The extent to which the PPP is fair. For PPP to be fair to households, especially lower income groups, a recycling of revenues to households (aka Climate Income) is needed to protect them from undue hardship. There is extensive evidence that public support is linked to two major factors: fairness and effectiveness, (EU, Germany, France, Austria, Slovakia, Nature). For PPP to be effective, pricing & coverage must be higher. The Climate Income element is needed to enable the PPP to rise still further over time. Consistency in the EU, and outside the EU. Carbon pricing in the EU is not consistent. The EU should legislate uniform carbon pricing (e.g. via ETS2 and covering remaining sectors and/or ETD) or facilitate enhanced cooperation between MSs. Globally, the PPP is not applied consistently. The EU can address this shortcoming by leading by example and spearheading wider international cooperation on PPP via e.g., G7 or G20 and within Canadas Global Carbon Pricing Challenge (https://tinyurl.com/3kps7kam). To address current shortcomings in the application of the PPP, emissions pricing needs to be extended and to rise. To apply the PPP globally, the EU needs to lead by example and support wider international collaboration.
Read full responseMeeting with Claudia Gamon (Member of the European Parliament)
25 Apr 2022 · Climate Income
Meeting with Pär Holmgren (Member of the European Parliament)
22 Apr 2022 · Carbon Pricing
Meeting with Jori Keijsper (Cabinet of Executive Vice-President Frans Timmermans)
20 Apr 2022 · Tax and Energy Meeting
Meeting with Diederik Samsom (Cabinet of Executive Vice-President Frans Timmermans)
20 Apr 2022 · Fit for 55
Meeting with Mohammed Chahim (Member of the European Parliament, Rapporteur)
20 Apr 2022 · FF55
Response to Social and labour aspects of the climate transition
19 Nov 2021
Citizens’ Climate Europe (CCE) believes that by working together, the EU and Member States can act decisively on climate change, ensure a socially just and fair transition, and foster much-needed public support. These three goals can be achieved by recommending that member states recycle emissions pricing revenue (see below) as a lump sum to citizens and residents in the respective member states, a concept termed Climate Income or carbon dividend. How is that the case?
Socially just and fair transition:
* Studies consistently show that a Climate Income protects the majority of households from rising prices due to emission pricing, and that low-income households typically benefit financially from this policy (see attachment).
* Emission pricing combined with a Climate Income will create local community-based jobs in the vast majority of sectors [ref: REMI 2014: 1%-2% over baseline, https://bit.ly/323XFOc], overcompensating for jobs lost in the transition necessary to achieve decarbonisation.
* Whilst there are many areas that could be funded from emissions pricing, the debate of which and how much to spend on each of them causes critical delay and is prone to vested interests. A Climate Income circumvents these problems and is intrinsically fair. It does not prevent strategic infrastructure investments funded by other means or subsidies for emerging technologies.
Widespread public support for emission pricing:
* Realising the high emission price levels needed to meet the goals of the Paris Agreement along a climate-realistic timeline requires sustained public support from a critical mass of citizens, many of whom will increasingly feel the effects of rising consumer prices for carbon-intensive goods and services. Climate Income will turn this otherwise painful experience into an attractive feature, providing support beyond the next election.
* A Climate Income creates positive instead of negative visibility for decisive climate action. The fundamental and appropriate concerns of EU citizens regarding the climate crisis would be seen to be actively being addressed, positively impacting anxiety levels and the value people associate with being European. [ref: EU data]
* These key mechanisms for public support have been well established through both failed policies and notable successes: Australia; France; British Columbia, Alaska, Switzerland and Canada. This was reinforced during the COP26 CPLC event “A price on Pollution to Achieve Net Zero” with senior members and ministers of: World Bank, WTO, IMF, EU, Canada and Sweden [https://www.youtube.com/watch?v=HMFnbU-wang&t=847s].
Acting decisively on climate change:
* Through addressing fairness and public support, Climate Income is an enabler for the emissions pricing necessary for rapid decarbonisation. It takes ‘social and political acceptability’ out of the set of constraints by design and allows the EU and MSs to choose the price path necessary to fulfill the NDCs.
* Public support does not only provide the political will for action, but can reinforce the action. Public support means that the Fit for 55 legislation would be seen as more secure, less prone to subsequent change, thus contributing to long-term investment decisions.This certainty is important as stated in the OECD FASTER Principles for Effective Carbon Pricing.
To align with existing commitments, Citizens’ Climate Europe asks that revenues from the following emission pricing are used by Member States for a Climate Income:
* all revenues from the new Transport and Heating Emissions Trading System (ETS),
* increases in funds from the existing ETS,
* potential new national carbon pricing schemes.
A steadily rising price floor on these carbon pricing schemes would provide certainty for business investments, certainty for household investments and the Climate Income, and, because of social fairness, create positive visibility for decisive climate action.
Read full responseMeeting with Diederik Samsom (Cabinet of Executive Vice-President Frans Timmermans)
17 Sept 2021 · Meeting on the European Green Deal
Meeting with Antoine Colombani (Cabinet of Executive Vice-President Frans Timmermans)
30 Jun 2021 · Fit for 55 package
26 Nov 2020
Citizens’ Climate Europe welcomes the EU’s increased climate ambition and recognises the need for review of the EU’s climate policies, including the ESR. We support the boldness of rethinking the whole architecture of the EU’s climate policies, so that they match increased ambition and are future proof.
We advocate for a steadily rising economy-wide price on all GHG emissions (in the following collectively called carbon price), with the associated fee raised as upstream as possible. If sufficiently ambitious, the carbon price will lead to cost-effective decarbonisation. Recycling of revenues to citizens (‘dividend’) ensures a fair transition and creates the political will necessary for ambitious carbon pricing. Recycling of revenue should be carried out by Member States. This provides equal pressure on every ton of GHG emissions, and incentivises the most cost effective reductions across the EU.
These goals could be achieved by reforming existing EU climate policy (see attached policy brief):
Option A: Phase-out of ESR, introduction of economy-wide carbon price
The ESR can be phased out only if emissions are covered by effective carbon pricing in essentially all sectors. Care must be taken that the price is not only stable, but is setting price signals for long-term investments. Otherwise, actors may delay investments and lobby for weakening of legislation in the presence of high prices later.
Introduction of a steadily rising carbon price can be achieved by introducing a floor price in an extended ETS, above which the price for allowances can fluctuate. Alternatively, and simpler, would be the introduction of an upstream charge on all fossil fuels via the ETD and rebating the lower of either the upstream charge or the ETS price, also establishing a floor price within the ETS.
Emissions not covered by carbon pricing need to be addressed by sufficiently stringent and effective regulations whose shadow price exceeds the economy-wide carbon price.
We recognise that this option is particularly suitable for science-based adjustments of targets.
Option B: Maintain ESR in sectors not covered by ETS, but introduce fungibility between ESR and ETS
A single carbon price for most emissions can also be achieved through introduction of fungibility between ESR and ETS. Specifically, member states could use European Union Allowances (EUAs) to supplement their annual emission allocations (AEAs) from the ESR by either withholding allocation of EUAs from auction or by purchasing additional EUAs in the secondary market. Conversely, member states with excess AEAs could convert those into EUAs to be auctioned or sold in secondary markets.
A floor price should be introduced in the ETS in this option as well, for the reasons outlined above. The ETS could be flexibly extended to include more sectors if conversions between EUAs and AEAs are high.
This option works towards a single carbon price and, and also introduces an intuitive and arguably noncontroversial option for ensuring compliance within the ESR.
Relation to Options outlined in IIA
Our Option A resembles the IIA’s Option 1, but with specific recommendations for reform of carbon pricing. While we appreciate the anticipated merits of Option 2, we are concerned that it induces a differentiated treatment for emissions that are both under ETS and ESR and those that are only covered by ESR. It is possible that member states focus on emissions covered by ETS, leading effectively to a differentiated carbon price. Our Option B is not depicted in the IIA. We would very much appreciate a detailed assessment of this option and its benefits.
Reform of the ESR depends on reform of more direct carbon pricing mechanisms in the EU. We strongly believe that an economy-wide carbon price with revenue recycling is the most efficient and fairest pathway to decarbonisation - and that this is within the reach of anticipated reform of EU climate policies, as detailed in our attached Policy Brief.
Read full responseResponse to Updating the EU Emissions Trading System
26 Nov 2020
The EU-ETS is one of the world’s foremost carbon pricing systems. It represents a significant political achievement in establishing the EU’s primary climate legislation. It has evolved over the years and now has the political attention and public demand for further ambition to meet the concerns of citizens regarding the latest science. Citizens’ Climate Europe advocates the following specific measures to become more effective.
Key recommendations to meet the 2050 neutrality goal and demonstrate the EU’s leadership on climate:
Coverage: Economy wide carbon pricing enables the EU to reduce all GHG emissions at lowest price point delivering economic efficiency. The EU-ETS currently covers around 38% of the EU's GHG emissions. Whilst the EU-ETS could cover some additional sectors to increase that share, it would be cost effective to introduce an upstream carbon price applied to all fuels that produce GHG emissions, for example using the ETD. By rebating the lowest of the ETD or ETS price to the price of allowances, this would establish a floor price within the ETS delivering pricing alignment and maintaining economic efficiency. Whilst at the same time enabling the CAP to operate on EU-ETS sectors covered.
Science led goals: The IPCC Special Report “Global Warming of 1,5C°” lays out a pricing corridor for GHG emissions (tCO2e) based on over 60 economic models run with multiple parameters. Broadly this indicates a price of €100 by 2030, €200 by 2040 and €300 by 2050. Consequently a steadily rising price that increases €10 p.a., would be a credible price path.
Predictability and Transparency: The steadily rising economy wide price will deliver greater predictability and transparency to the cost of emissions. The certainty of the pricing signal is key both to long term business planning and investment funding. Such funding will naturally be attracted to the most cost effective emissions reductions in the whole EU economy. The combination of economy wide price and the certainty of future price incentivises all actors in the economy to make decisions within their own domain.
Revenue use: The pricing advocated will generate substantial additional revenue which should be recycled to citizens based on each Member State’s verified emissions. This will address households' ability to cover increased costs, reducing the regressive impacts. This can be done by extending the existing directive for auction revenue use and complement the climate and energy-related purposes with solidarity and growth. This clear signal will boost the needed public support for long term legislation, and enhances the relationship between the EU and its citizens. Furthermore this maintains balance in each national economy, protects the vulnerable and supports subsidiarity.
Simplicity: The simplification achieved with these recommendations reduce administrative burden, increase resilience and integrity, and importantly demonstrate an approach easier for third parties to follow, especially those lacking the resources and institutions to implement a more complex policy. In particular the household rebate makes adherence to environmental policy by member states easier to monitor. Additionally, there are simplification benefits for other legislation such as the CBAM and ESR currently being reviewed.
Read full responseResponse to Revision of the EU Emission Trading System Directive concerning aviation
28 Aug 2020
Citizens’ Climate Europe (CCE) appreciates the EU’s high ambitions to tackle climate change. All sectors will have to contribute to achieve these goals, including aviation. Such efforts must begin immediately and increase steadily. As a global leader on climate change the EU must avoid policies that could limit its ambition.
CCE is an affiliate of Citizens’ Climate Lobby (CCL), a global, nonpartisan organisation of volunteer lobbyists that advocates for a carbon fee & dividend (CF&D), a particularly effective mechanism that supports other mitigation policies. CF&D can take many forms, the most appropriate of which depends on a region’s overall policy framework. Therefore, CCE focuses on 4 core principles rather than a specific regulatory proposal (see attached policy brief for more details):
1) A steadily rising price for emissions contributing to climate change (carbon price)
Investments in both low-carbon solutions for aviation and alternative transportation options tend to have long payback periods. The less certain it is that aviation will face high future carbon prices, the greater the risk of and the lower the motivation for making investments. To ensure investments are made now, aviation must face a steadily rising price for its emissions. As the recent change in CORSIA’s base year shows, CORSIA is subject to global negotiations and political pressure. The future supply and demand for offsets are equally unclear.
Aviation, including international flights, should therefore be included in the EU’s carbon pricing scheme to the fullest extent possible, with free allowances rapidly phased out. Ultimately, the EU’s carbon pricing policies should be reformed to ensure all actors face a predictably and steadily rising carbon price (see attachment).
2) Recycling of revenues to citizens / Fairness
The limited supply of effective offsets should be reserved for hard-to-decarbonise uses that are particularly beneficial to society. Since most flights are taken by a small minority of people, it may be unfair for aviation to consume a significant portion of this scarce supply. Instead, as part of a just transition, flyers should be asked to pay for the environmental damage, with the revenues returned to the broader population (most of whom fly only rarely, if at all).
Revenues should be returned directly to citizens (see attachment) or, as a second-best alternative, support investments that benefit all of society such as investments in infrastructure for low-carbon mobility.
3) Protection against carbon leakage
The EU should participate in CORSIA to ensure global progress on aviation, but it should complement this with carbon pricing for all flights. If carbon pricing applies only to domestic flights, EU travelers might take more trips outside the EU, hurting domestic tourism and reducing the effectiveness of domestic-only pricing. Furthermore, application of carbon pricing to all flights would encourage non-EU airlines to invest in decarbonisation.
Reliance only on CORSIA would limit the EU’s ability to increase its ambition in the future. Given the EU’s leadership role and importance to aviation, reliance on CORSIA alone would make it harder for other jurisdictions to pursue alternative policies too.
4) Simplicity
Differentiated treatment for certain sectors reduces the effectiveness of carbon pricing and raises administrative burdens. The appearance of exemptions for certain industries decreases public trust in climate policies, rendering them politically vulnerable (whereas receiving regular carbon dividends would increase public support). This vulnerability feeds into the uncertainty described in point (1), which limits long-term action. Thus, differential treatment for aviation should be phased out.
Taken together, we suggest (i) inclusion of all flights into the ETS and phasing out of free allowances, (ii) redistribution of the associated revenues, and (iii) continued efforts to increase global ambition
Read full responseMeeting with Antoine Colombani (Cabinet of Executive Vice-President Frans Timmermans)
5 Jun 2020 · Green Deal and carbon pricing
Response to 2030 Climate Target Plan
15 Apr 2020
Citizens’ Climate Europe appreciates the EU has set high ambitions to tackle global warming and embraces becoming CO2 neutral by 2050 as a clear climate objective. We support increasing the ambition of the 2030 climate targets.
The policy we advocate for, Carbon Fee & Dividend (CF&D), would support an efficient and socially fair transition in alignment with the EU’s increased ambition. According to several studies by IPCC, IMF, OECD, economy-wide carbon pricing is a key instrument in climate policy. Combining it with a dividend is expected to address many of its social and political consequences and to increase acceptance of carbon pricing.
Impact on economy:
* An economy-wide domestic carbon price creates equal economic pressure on every tonne of emissions. This applies throughout the value chain and leads to more efficient emission reductions by capturing as many abatement channels as possible.
* A steadily rising carbon price avoids a price shock in the near future, and facilitates effective decarbonisation in line with an increased ambition on 2030 targets.
* Implementing a rising, economy-wide carbon price provides investors with a clear signal regarding the direction of the EU economy, giving them the necessary confidence and price incentives to redirect investments into low-carbon technologies, spurring innovation and reducing the risk of stranded assets. The resulting private investment flows would leverage public funding.
* An economy-wide carbon price can be integrated with the existing ETS in a number of ways, the most straightforward being as a floor price. The floor price would give the EU a mechanism on which to base international discussions on carbon pricing and deliver a benchmark towards a carbon border adjustment mechanism.
Impact on society:
* Any serious decarbonisation policy will have an impact on the price of carbon-intensive products, whether through carbon pricing, regulation or direct reduction mandates. When that happens, distributional impacts will emerge as an important issue. Returning revenue to the public in the form of an equal dividend addresses this issue, ensuring energy affordability and connectivity for most members of society. Most households, typically vulnerable and mid-income ones, would be better off.
* Popular support for climate policy is crucial. Evidence from Canada shows good public communication secures majority public support. It should also provide a clear signal that the concerns of EU citizens on climate change are addressed and that everyone is part of the solution.
* Reflecting the carbon content of a product in its price is consumer-friendly. It avoids limiting consumer choice, but facilitates decision-making based on the always-used benchmark of price. Those who choose to consume more carbon-intensive goods will pay more to do so.
Impact on environment:
* A projection of the effects of CF&D for the US (reviewed by the World Bank) shows a reduction in emissions by 33% from baseline in the first 10 years [1].
* By achieving similar results, the EU would achieve 78% of the enhanced 2030 goal of 55%.
* A CBA based on CF&D impacts consumption-based emissions and gives foreign producers exporting to the EU the same degree of price certainty as domestic firms.
* CF&D would be promoted to many countries world-wide, due to its ease of implementation and effectiveness impacting wider emissions.
The attached document and the references therein, in particular projections for the US economy [1], provide further details on CF&D and the expected impact on economy, society, and the environment.
In conclusion, CF&D is expected to be able to serve as a key component in a mix of policies that can both deliver on increased ambition and at the same time address the economic and social challenges that come with it.
[1] “The Economic, Climate, Fiscal, Power, and Demographic Impact of a National Fee-and-Dividend Carbon Tax”, https://citizensclimatelobby.org/remi-report/
Read full responseResponse to Carbon Border Adjustment Mechanism
25 Mar 2020
1) Instrument: The CBA should use a fixed and steadily rising price. The price per-tonne CO2e should be lower at first (ie €15/t) to avoid an immediate shock but rise automatically every year by a set amount (ie €10/t). This works best paired with a newly-created domestic carbon fee using the same price and charged upstream “at the source” to ensure economy-wide coverage. For installations under the ETS this would serve as a floor price.
Benefits include:
+ A level playing field by combining the CBA with an EU-wide price floor. A CBA based (directly or indirectly) on the ETS price would not offer this unless (i) all emissions embodied in domestic goods are also fully covered, (ii) state aid is ended and (iii) importers can bank allowances too.
+ Certainty. A predictably rising price allows firms to precisely compare investments in decarbonisation against a minimum cost for continued emissions, giving them confidence long-term investments will pay off. Without a clear price path, foreign producers will struggle to estimate how many allowances will be available to them in the future / what floating price they’ll have to pay. So they won’t act until they feel an impact.
+ Minimised administrative burden. Incorporation into the ETS would (i) be challenging for customs officials to manage on a daily basis (as would a floating CBA price linked indirectly to the ETS), (ii) require expanding the allowance supply, which risks causing a shortage or excess and (iii) be complicated for exports.
2) Methodology: Carbon content estimates should be based on global (not EU) benchmarks by default, with importers given the right to provide more specific measurements.
Benefits include:
+ Ambition. EU decarbonisation is farther along than in most regions, so EU benchmarks would be overly generous to importers and encourage carbon leakage (a domestic firm could get “benchmark credit” by shifting production offshore instead of actually decarbonising).
+ Supply chain transparency. Firms would be incentivised to report / reduce their tertiary emissions, and so better understand their supply chains’ environmental impacts - a goal of the Green Deal.
3) Coverage: The CBA should cover all Energy Intensive Trade Exposed (EITE) goods and be expandable to others where the impact is material.
Benefits include:
+ Elimination of free allowances and state aid. Member States can raise more auction revenues and save on state aid, providing them with additional funds to support their transitions.
+ Adaptability. Imagine a firm manufacturing cans in the EU with imported aluminium. If the CBA only applies to primary aluminium, the firm could get around it by shifting can manufacturing offshore and importing finished cans instead. That would cause EU job losses and carbon leakage unless the CBA can be adapted.
+ WTO integrity: The EU would not be accused of covering only those EITE goods where it stands to benefit.
+ Revenue. The EU imports more carbon than it exports so a broad CBA would generate funds for the EU budget.
+ Diplomacy. This creates an incentive for trading partners to price carbon.
4) Fairness: The combined measures above would protect jobs and spur EU innovation. However, the CBA and loss of free allowances will increase companies’ costs, which will be passed on to consumers. For ambitious carbon pricing to be politically viable citizens must be protected. The domestic carbon fee’s net revenues should be redistributed as a monthly dividend to all households.
Benefits include:
+ Polluter pays. Carbon emissions are highly unequal in society. Most people would net benefit from an equal redistribution of carbon fee revenues, especially those with lower incomes.
+ Families receiving a carbon dividend would have extra cash to spend in the economy. And they would see their net benefits increase if they choose to buy low-carbon goods and services.
+ Carbon Fee & Dividend is self-funding, requiring no new budget allocation.
Read full responseResponse to Climate Law
3 Feb 2020
Pricing Carbon is the single most effective policy for addressing the majority of GHG emissions. We propose 3 basic elements with significant international evidence to achieve climate neutrality in Europe. This is at zero cost in way that incentivises the rest of the world to follow suit:
1. Price Carbon: Upstream, in a steadily increasing, transparent and economy wide way. Consistent with: IPCC 1.5ºC corridor; IMF projections and OECD FASTER principles. This will deliver 70 - 90% of IPCC 1.5ºC goal at zero cost. Allow for price corridor review based on actual emissions reductions. Economy wide consistent pricing across Europe can be achieved with ETS integration.
2. Dividend: Return 100% of revenue to households as lump sum monthly payments to keep the economy in balance. Delivers “Just Transition” and ensures popular support needed to maintain policy for 20-30 years. Every actor from individual to largest Industry, including public sector is motivated to reduce emissions at the most cost effective point in every decision made.
3. WTO compliant BCA protects the EU economy and establishes a level playing field for Industry on an international basis. This creates an economic lever for wider international adoption. Emissions trade data supports that the EU is disproportionately influential and would operate a surplus BCA. Economy wide pricing avoids sectoral BCA issue of ongoing cost and complexity associated with data gathering outside EU jurisdiction in every trading partner.
Other policies will be needed to address emissions not covered by pricing emissions.
There is scientific and economic consensus that this works for most of the problem, and is the highest priority policy that enhances the effectiveness of other climate policies.
Read full response