From Irina Slav on energy

By Irina Slav

“If a robust, resilient, sustainable and innovative economy is our goal, then dogmatically clinging to our existing business models, whatever their past successes, is not the solution.”

The profound words of wisdom come from EC president Ursula von der Leyen in a letter to member states. The goal of the letter is to appease those among them worried that a planned expansion of the carbon market in the EU would hurt people financially.

The letter was quoted copiously by Politico, which sought to help President von der Leyen in her reassurance effort, also featuring the heartfelt statement that “no one should be able to submit our economic and social fabric to so much tension that it breaks down.” Which is absolutely hilarious.

The planned expansion of the carbon market, also known as the Emissions Trading System, would cover, in addition to heavy industries, transport and buildings, meaning heating. The less green your car and your heating system, the more you pay for both, per the plan. Per reality, higher prices are not going to be welcome. So von der Leyen has promised to cut carbon costs before the expanded market comes into effect in what must be a first in the history of trade.

“What we need is a transition that is just and fair, whereby especially vulnerable households, small companies and regions that are most exposed to structural changes are protected and supported,” von der Leyen also said in her letter, apparently thinking that stringing together buzzwords — or what passes for buzzwords in Brussels — would be enough for Eastern and Central European countries to calm down and say “That’s all right, then.”

When it comes to actual measures to ensure the ETS expansion does not plunge even more people into poverty, there is precious little to report. Per Bloomberg, “The commission will enhance the role of a reserve pot of permits under ETS2, known as the Market Stability Reserve, von der Leyen said. The bloc’s executive branch is also exploring the possibility of front-loading auctions of permits, which could also curb price rises. The European Investment Bank would play a role, she added.”

In short, the Commission doesn’t know what the hell it’s doing but it’s doing it anyway. Or at least talking about it. It’s complicated. The EU likes complicated. It helps the people running the show pretend they know what they are doing. It’s a fun show.

The von der Leyen camp in Brussels has been working tirelessly to convince the EU that we need to reduce emissions more and faster, even if it costs a lot — and it will. Since no one would do it voluntarily, they came up with the idea of extending the ETS, which hitherto only hurt power generators and industries such as steel and cement, among others, to start also hurting the transport industry and everyone who uses a mode of transportation with an engine and heats their home. Inevitably, the pain will cascade throughout the economy because goods and services use transport to get from provide to consumer.

The word “hurt” is not an exaggeration, by the way. You know the claims that coal power has become more expensive than wind and solar in Europe? That’s because of the ETS. You know how heavy industries are complaining about losing competitiveness? That’s also because of the ETS.

No wonder, then, that the poorer members of the EU spoke out against the ETS expansion earlier this month, writing their own letter to the Commission, in which they asked for a delay in the ETS expansion until 2030. Not that it would make any difference, but it’s a start.

“The 2027 launch of ETS2 risks triggering unintended social, economic and political disruptions, particularly in member states with higher exposure to energy poverty,” the authors of that letter wrote in a rare instance of truth being spoken at the higher echelons of power in the EU. What they got in return, was words that mean nothing.

Here are some more of those words from the Politico report: “For the EU’s economy to take its rightful place in the global economy, we must be among those who are driving the response to the challenges of our time,” Ursula of Brussels wrote. The challenges? “The scientific reality that we are increasingly putting our prosperity and our social models at risk, while our communities risk becoming uninhabitable.” I don’t know where that last part comes from. It’s not like we’re losing habitat.

Then come the so-called concessions. One of these is getting some of the planned emission cuts from… international carbon credit trading. Not a lot, just 3%, but it’s the thought that counts, I’m sure. Another thought that surely counts is the upcoming revision of emission cuts under the — brace yourself — the LULUCF regulation.

LULUCF stands for land use, land use change, and forestry and “aims to enhance governance, promote transparency, and strengthen the link between climate mitigation and environmental protection measures.” I apologise for quoting EU documentation to you when you have done nothing to deserve it. Basically, the idea is to turn the land into a carbon sink because, as we know, emissions must be cut at all costs. Well, almost all costs. Unrest in the East does not seem to be an acceptable option, hence the assurances.

One more thought that would probably count if we ever see it, is Climate Commissioner Wopke Hoekstra’s proposals for carbon cost cut measures… which were supposed to be made public on Tuesday but weren’t, at least not anywhere where I could find them, including on his X account. I’m not holding my breath for any major concessions from Hoekstra. He is a “at all costs” type of man. And he’s about to become an even unhappier man than he already is because China is so not committing to cutting its emissions by 200% by 2030.

Here’s what’s going to happen. The Commission will delay the ETS2 as they lovingly call it, just like it will almost certainly delay the 2035 ICE car ban. The Commission will do everything it can to avoid an Eastern European revolt against the transition. Then again, they might just try to override the quite legitimate concerns of the East in what would ultimately hasten the end of a political and economic structure that has become a bloated pool of incompetence, geopolitical rabies, and destructiveness. “Fabricati Diem, Pvncs.”