Corporate Europe Observatory

Exposing the power of corporate lobbying in the EU

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Letting the market play

'Letting the market play - corporate lobbying and the financial regulation of carbon trading' examines the reforms being proposed to regulate carbon trading following a series of frauds, and looks at the role of the corporate lobbies in trying to influence this process.

This report outlines a series of reforms to the regulation of carbon trading in response to fraud and the financial crisis, and financial sector efforts to disrupt them. It shows that:

- The European Commission adopted a deliberately light touch approach to regulating its Emissions Trading System since its launch in 2005. A series of fraud cases made this position untenable.

- The Commission has proposed measures to tighten security, which was previously so lax that it was easier to become a carbon trader than to open a bank account. However, the new rules would also cover-up evidence of fraud and gaming by hiding carbon permit serial numbers. The Commission’s intention is to re-issue stolen permits, opening an additional hole in the scheme’s accounting for emissions.

- The Commission has belatedly identified carbon as a commodity that is susceptible to excessive speculation. Leaked drafts of the Market in Financial Instruments Directive (MiFID), a set of rules governing European financial markets, are set to be extended to include carbon trading.

- New regulations on carbon trading have been consistently opposed by financial services lobbyists. For example, in January 2011, the European Commission halted trading on a key part of the carbon market after the latest in a series of large fraud cases was uncovered. Less than a month later and with the suspension still partly in place, the International Emissions Trading Association (IETA, the main carbon trade lobby group) were privately insisting to Brussels officials that “there might be no need to regulate this market.” This report documents how financial sector lobbying has been driven by a desire to find new opportunities for carbon market speculation by whatever means are necessary.

- Although the lobbyists look to be losing some of these battles, plenty of loopholes remain in the financial regulation of the carbon market. More fundamentally, emissions trading introduces speculation by design and has failed to meet its stated objectives. There is a need to de-financinalise climate policy.

Read the full report here.

Attached files: 
This report outlines a series of reforms to the regulation of carbon trading in response to fraud and the financial crisis, and financial sector efforts to disrupt them. It shows that:- The European Commission adopted a deliberately light touch approach to regulating its Emissions Trading System since its launch in 2005. A series of fraud cases made this position untenable.- The Commission has proposed measures to tighten security, which was previously so lax that it was easier to become a carbon trader than to open a bank account. However, the new rules would also cover-up evidence of fraud and gaming by hiding carbon permit serial numbers. The Commission’s intention is to re-issue stolen permits, opening an additional hole in the scheme’s accounting for emissions.- The Commission has belatedly identified carbon as a commodity that is susceptible to excessive speculation. Leaked drafts of the Market in Financial Instruments Directive (MiFID), a set of rules governing European financial markets, are set to be extended to include carbon trading.- New regulations on carbon trading have been consistently opposed by financial services lobbyists. For example, in January 2011, the European Commission halted trading on a key part of the carbon market after the latest in a series of large fraud cases was uncovered. Less than a month later and with the suspension still partly in place, the International Emissions Trading Association (IETA, the main carbon trade lobby group) were privately insisting to Brussels officials that “there might be no need to regulate this market.” This report documents how financial sector lobbying has been driven by a desire to find new opportunities for carbon market speculation by whatever means are necessary.- Although the lobbyists look to be losing some of these battles, plenty of loopholes remain in the financial regulation of the carbon market. More fundamentally, emissions trading introduces speculation by design and has failed to meet its stated objectives. There is a need to de-financinalise climate policy.Read the full report here.
Partner organisation: 
 
The International Civil Aviation Organization is expected to agree a new climate deal at its current assembly meeting. But its promise of “carbon neutral” flying through voluntary carbon offsetting is delusive, posing new threats to the environment and communities.

It's almost six months since EU Climate Commissioner Miguel Arias Cañete claimed to have negotiated an historic global deal to tackle climate change at COP21in Paris. The 3 May also marked a year and a half of Cañete being in the job. However, he and his his boss, Vice President of the Commission Maros Šefčovič, continue to give privileged access to fossil fuel players trashing the climate, who have enjoyed eight meetings to every one involving renewable energy or energy efficiency interests since the Paris deal was signed. Rather than a change of direction, it's business as usual for the European Commission following the Paris Agreement, which is great news for Big Energy but a disaster for those serious about tackling climate change.

In the middle of May over 4000 people from all over Europe gathered in the Lusatia region in Eastern Germany. The plan? To block a Vattenfall-owned opencast lignite mine.

In light of the ITRE Opinion and forthcoming discussion on the proposed Directive to reform the Emissions Trading System (and “enhance cost-effective emission reductions and low-carbon investments”), CEO offers comments. 

Ultimately, revisions of this sort are nowhere near enough. The new ETS Directive requires some "damage limitation." But it is also a time to reflect on the need to move beyond emissions trading at the heart of EU climate policy. There are many ways to achieve this: http://corporateeurope.org/climate-and-energy/2014/01/life-beyond-emissi...

The European Food Safety Authority (EFSA) told CEO today, and publicly announced on their website, that they would disclose most of the raw data of studies on glyphosate used in the EU's toxicity assessment of glyphosate.
In an attempt to fix its public image, Dieselgate-shaken Volkswagen names former EU Climate Commissioner Connie Hedegaard as member of its new ‘Sustainability Council’. Although the role is unpaid, it is highly questionable whether Volkswagen is actually committed to making up for its previous foul play.
The Commission proposal for 'mandatory' transparency register is a disappointment. Its measures will do little to help journalists, civil society and citizens scrutinise the corporate lobbies trying to manipulate EU policies in their favour.
Corporate Europe Observatory is looking for an experienced, creative and dynamic outreach and mobilisation organiser to strengthen our visibility as well as public engagement with CEO's work in countries across Europe. The 13-month contract will run from 1 December 2016 to 31 December 2017.
 
 
 
 
 
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The corporate lobby tour