The extension of emission trading to buildings – a serious threat to over 50 million Europeans
(13 July 2021) Tomorrow, July 14th, the European Commission will present its Fit for 55 package, a broad bundle of measures intended to pave to way to a emission reduction of 55% by 2030, the end of the decade. The outlines, and some leaked documents, are already known. Among the various files is a particularly explosive proposal: The European Commission is planning to extend the EU Emissions Trading System (EU ETS) to buildings.
Improving the energy efficiency of buildings is undoubtedly a crucial aspect of the energy transition. Seven out of ten buildings are considered energy inefficient. Renovations have the potential to alleviate the burden for over 50 million Europeans who cannot sufficiently light, heat or cool their homes.
However, the EU ETS is a woefully inadequate tool to achieve this aim. The measure risks to increase energy poverty and hit vulnerable households the hardest. The inability to afford renovations or more efficient heating devices will leave them with increasing energy bills, making it in turn even more difficult to invest in energy efficient devices. A vicious circle and a far cry from the just transition unions have been demanding for years.
Adding insult to injury, the EU ETS is unlikely to contribute significantly to a reduction of emissions. A study by the European Climate Foundation (see link below) finds that “An extended ETS would not, by itself, deliver the substantive reductions in emissions required of road transport and buildings.”
Some encouraging steps in the right direction, but nowhere near enough
With that being said, after months of advocacy by the Right to Energy Coalition, of which EPSU is a member, the proposal does take some encouraging steps to help target energy poverty, with a new article to protect vulnerable consumers and, significantly, a proportion of energy savings guaranteed to come from energy poverty mitigation programmes.
This is complemented by funding – including a new ‘Climate Action Social Facility’ (CASF) to provide funds and technical assistance for low-income households in the Green Deal. This is a recognition of the need to support energy-poor Europeans to access renovations and renewable energy – however the details are vague, and the source of revenue is still disputed and unlikely to be sufficient.
Market-based solutions miss the mark
On the extension of the EU ETS, Penny Clarke, EPSU Deputy General Secretary, said “While the Commission sends some positive signals by recognizing and targeting energy poverty, this is not likely to be anywhere near enough to face up to the hardship energy poor households will face as a consequence of the extension of the EU ETS. The fundamental problem lies in the reliance on market logic to mitigate the climate crisis. Apart from simply not being very effective, it risks leaving vulnerable households across Europe in the cold. With its regressive distributional effects, it is not an adequate response in any sense.”
When it comes to guaranteeing a just transition for energy poor households, it is clear that market-based solutions are not up to the task. Instead, the solution must lie in expanding the role of the public sector and guaranteeing a Right to Energy to all. In 2017, EPSU and the European Anti Poverty Network (EAPN) published a report on the necessary measures to realise this right. (see link below)
The key recommendations are:
- The Right to Energy for all by introducing concrete EU legislation banning disconnections for vulnerable consumers at critical times.
- Stop the phasing out of regulated prices in the energy sector for domestic households and support social tariffs for vulnerable customers.
- Assign an ambitious share of public investment in energy efficiency towards measures targeting low income households ensuring no additional costs in housing or bills for these households.