Phasing out the EU

This weekend the European Parliament and the leaders of EU members had reason to celebrate. They agreed an overhaul of the bloc’s emission-trading market in order to meet updated emission reduction targets — unsurprisingly, more ambitious than the old ones.

The document of the agreement published on the European Parliament’s website bursts with pride and ambition, and with good intentions about helping those who stand to suffer the most from these ambitions. What it lacks, as usual, is the nitty-gritty of how exactly these ambitions will be put into action in such a way as to not bring down every EU economy.

The deal mandates a 62% reduction by 2030 in the emissions produced by the industries currently covered by the Emissions Trading System, which include “energy-intensive industry sectors including oil refineries, steel works, and production of iron, aluminium, metals, cement, lime, glass, ceramics, pulp, paper, cardboard, acids and bulk organic chemicals, and commercial aviation within the European Economic Area”.

To do that, the EU is going to stimulate these industries to emit less by — wait for it — reducing the availability of emission permits, slowly at first, and then dramatically. The reduction will be both for free and paid permits, essentially forcing businesses from the above industries to look for ways to emit less, whether it is physically possible or not.

Because that’s not a form of arm-twisting at all, the EU will also expand the scope of its emission-trading mechanism to include emissions from fuels used in road transport and buildings, as well as “for other sectors such as manufacturing”.

What this means is that by the end of this decade, every single person in the EU will be paying for emissions generated during the production of all the goods we use, including food as it is often, dare I say overwhelmingly, transported by road, and, of course, energy.

Goods shipped by, well, ships, will also be affected, because shipping is also being added to the scheme. This year’s inflation might very soon start looking like a picnic compared to that, not least because of all the new bureaucracy that this overhaul will sprout.