In Europe, we have an institutional climate protection scheme, the EU Emissions Trading System (EU ETS). This legally regulates CO2 emissions across the European Union for many sectors of the economy—such as power generation and air travel within Europe. The EU ETS determines how much CO2 these sectors are allowed to emit. Like all free markets, it works on the basis of supply and demand. Companies can buy or sell emission rights. If emission rights are released, they may be used elsewhere to emit CO2.
Why doesn’t choosing green energy in the EU reduce emissions?
As an EU citizen, if you decide to switch to green electricity from now on, that’s good for you personally, of course. You will no longer be supporting a coal power plant. As a result, the coal power plant in question will generate less electricity. This is because coal power plants are included in the EU ETS. This means that the plant necessarily needs fewer CO2 rights. Unfortunately, these CO2 rights don’t simply disappear, they’ve just become available again. Another company can then buy them and use them to emit CO2. So the total amount of CO2 in the EU doesn’t go down at all when you switch to green power. The right to emit only moves from one source to another.
Does choosing green energy still make sense?
Even if your choice of green energy has no impact on the European Union’s CO2 emissions, the switch is an investment in the future of sustainable energy in Europe. We must expand renewable energy in order to solve both world energy crises and the climate crisis. Since we’re operating within the EU ETS in Europe, we must use this system to accelerate our transition to renewable energy as quickly as possible. Emissions trading is indeed a highly effective tool to force industry to expand renewable energy. However, the urgency of our climate crisis urges us to ask ourselves: Is there more we can be doing?
How can we have the greatest positive impact on the climate?
In Europe, the number of emission rights is not unlimited. The EU ETS is responsible for determining how much CO2 may be emitted each year. As the amount of emission rights released is reduced year-to-year, emissions in regulated industries necessarily come down as well. The problem is, the regulatory cap on emissions is coming down far too slowly to address the climate crisis. The quickest path to a meaningful reduction in CO2 emissions in the EU is to additionally cancel emission rights.
At ForTomorrow, we aim to beat the system by using the system. We’re buying up emissions rights and setting them aside unused. This means fewer CO2 rights are available for purchase, forcing large emitters to cut back. This is the most effective approach for individuals to sustainably reduce CO2 in Europe.