The European Parliament agreed on Tuesday, April 18, to a strengthened EU Emissions Trading Scheme (ETS) and CO2 levy on imports (CBAM). In doing so, after two years of negotiations, Parliament signed up to the Green Deal's climate targets. "Climate policy requires ambitious targets but should not penalize European production in favor of foreign imports," argues Adri Bom-Lemstra, president of Glastuinbouw Nederland.
"Double charges by the ETS and CBAM lead to loss of competition and an unfair playing field. Fair competition, where greenhouse horticulture is part of the climate solution, should serve as the basis for this 'Fit for 55' climate package," Bom-Lemstra stressed.
Higher production costs due to revised ETS
The ETS will be completely overhauled by 2027. The ETS climate target will be further increased: by 2030, 62 percent of CO2 emissions under the ETS must be reduced compared to 2005. A task compared to the previously agreed 43 percent.
To achieve this, the ETS emissions cap will fall faster. From 2024 this will be by 4.3 percent per year. After 2028 it will be 4.4 percent annually. Lowering emissions allowances in the EU, including a gradual phase-out of free allowances, should free up more funding for decarbonizing ETS sectors.
A second ETS will be introduced for emissions currently outside the system. ETS 2.0 will come into force in 2027, provided energy prices are affordable. By 2028 at the latest, fuels used in non-ETS sectors to be determined will be included in this ETS.
However, Glastuinbouw Nederland warns of a price-driving effect for fuel costs should the sector be considered for inclusion in ETS 2.0. This would increase production costs in greenhouses, leading to a more expensive shopping basket at the checkout.
To keep fruit, vegetables, flowers, and plants affordable, Bom-Lemstra points to the possibility of excluding sectors. "If a sector is already covered by a similar CO2 system, a member state may offer an exception to ETS 2.0 for this. Greenhouse horticulture has had such a climate system for years. Our CO2 sector system secures our climate target of 2030 and, ultimately, climate neutrality in 2040."
"This was recently agreed with the government in the covenant as a contribution to the 'Fit for 55' package. Growers, therefore, see this CO2 sector system as a more effective, fairer, and more appropriate customized instrument for achieving and securing climate targets than inclusion in ETS 2.0."
Unfair competition by CO2 fortress Europe
In addition to the ETS, a carbon tax on imports will be introduced. Imports of iron, steel, electricity, fertilizer, aluminum, and cement must offset CO2 emissions abroad under the carbon border adjustment mechanism (CBAM) to enter the European market. This carbon tax at the border should thus create a level playing field for European producers against foreign competitors, who would otherwise pay no carbon tax.
"We subscribe to the importance of fair competition for affected sectors but fear that a 'CO2 Fortress Europe' will lead to a relocation of horticultural production outside Europe. Dutch greenhouse horticulture already has high production costs. With CBAM being added, the construction, maintenance, and production costs of our European food sovereignty will rise even further, while cheap food imports will continue to be allowed because they are not covered by CBAM and therefore do not have to determine a CO2 tax.
This double penalty is unfair and leads to the opposite of the intended effect, namely carbon leakage from European horticulture and fewer Dutch-sourced products on the shelves," said the president of Glastuinbouw Nederland.
Source: Glastuinbouw Nederland