As the EU Environment Council meets today in Luxembourg to debate the proposals presented in July by the European Commission to reform the EU Emissions Trading System (EU ETS), Philippe Joubert, Chair of the Corporate Leaders Group (CLG), wrote in a letter to the 28 EU Environment Ministers:
"Whilst we welcome reform of the EU ETS, we do not believe that the Commission's ETS reform proposal will deliver a carbon price sufficient to maintain the EU ETS as the cornerstone of EU climate policy, nor will its auctions generate sufficient innovation funds to help industry decarbonise."
The Corporate Leaders Group made seven specific proposals to strengthen Europe's carbon market. CLG urged the European Union to simultaneously start phasing out environmentally harmful subsidies including fossil fuel subsidies.
"Without actions to reform fossil fuel subsidies, the effectiveness of carbon pricing is blunted," the letter said.
"We cannot just focus on ETS reform and increasing the carbon price without eliminating fossil fuels subsidies due to their disruptive signal to investors and society at large. Failure to act concurrently on these fronts represents inefficient use of government policy to unlock new, low carbon investment."
CLG business leaders believe that there is a window of opportunity to eliminate direct subsidies now, as international oil prices are low, so the impact of reform on consumers will be less, and more easily mitigated for the poorest in society. This is also a good time to be reducing unnecessary government expenditure.
CLG urged all EU members to sign Fossil Fuel Subsidy Reform Communiqué, which puts a spotlight on the climate change mitigation potential of fossil fuel subsidy reform and galvanises international reform action at both national government and international organisation level.