The Netherlands has warned other EU countries about the financial underpinning of Climate Commissioner Frans Timmermans' fuel transition plan.
To quickly reduce dependence on Russian oil and gas imports, the European Commission launched a sweeping energy transition plan this spring. This plan includes a combination of energy savings (electricity and gas), switching to liquefied LNG natural gas, increased purchases from Middle Eastern countries, significantly more offshore wind farms in the North Sea, higher production of agricultural biogas, and increased taxes on heavy energy consumers.
Timmermans aims to partially finance this multi-billion euro plan using various European subsidy funds, such as the rural fund under the Common Agricultural Policy’s second pillar. He also wants to tap into financial reserves from the ETS carbon levy. The European Commission says EU countries can raise 20 billion euros by selling “idle” permits from the “market stability reserve” of the EU carbon market.
Countries like the Netherlands, Germany, and Denmark oppose this idea and warned that manipulating the market reserve could undermine trust in climate policy. Selling more permits would not only reduce the carbon price but also make it cheaper to pollute, Energy Minister Rob Jetten recently said.
“It is of utmost importance to maintain the integrity of the ETS,” Finance Minister Sigrid Kaag told her EU colleagues this week in Brussels. The European Parliament’s Agriculture Committee launched a frontal attack on Timmermans’ funding plans last week, and his tapping into the second CAP pillar.
Some EU diplomats remain cautious of changes that could undermine the recently built trust in the ETS market, and one warned against using the carbon market as a “piggy bank” for other political purposes.