Asmann: ETS no longer fulfills its tasks, needs reform
Ahti Asmann criticizes the EU Emissions Trading System, arguing it no longer stimulates innovation but creates political pressure and weakens European industry. He calls for a reform to make the system predictable and competitive.
The European Union's Emissions Trading System (ETS) no longer fulfills its tasks and as a climate policy tool has virtually no global impact, writes Ahti Asmann. He notes that global CO₂ emissions continue to rise, and no other country has joined the EU initiative.
Asmann argues that the ETS has become an unstable and politically managed instrument that weakens European industry. Companies are forced to invest according to political requirements rather than market demand, and there is no clarity about future allowance prices. This makes rational industrial investments impossible.
According to Asmann, reforms that return part of the auction revenues to industry do not address the main question: what if the chosen path turns out to be economically or technologically wrong? He states that the ETS has become a tool for decarbonization at any cost, ignoring costs and economic consequences.
The risk is shifted from entrepreneurs to society as a whole – taxpayers, consumers, and other businesses. Asmann describes the ETS impact chain: additional costs for energy-intensive industry, loss of competitiveness, relocation of production to countries with less stringent requirements, loss of jobs and tax revenue, and ultimately no environmental gain because emissions are moved outside the EU.
He compares the situation to the alcohol excise duty increase in Estonia, where consumption did not significantly decrease but tax revenue leaked to Latvia. As an alternative, Asmann suggests treating carbon emissions as an unavoidable environmental impact and reducing them through a reasonable price signal, rather than trying to reach zero at all costs.
For Estonia, climate policy is as important as energy security and a competitive economy. Asmann calls for reforming the ETS based on three principles: special conditions for fossil fuels produced within the EU to reduce dependence on third countries; maintaining the volume of free allowances; and reforming the ETS as an environmental tax with a price cap to prevent speculative spikes.
He regrets that too little attention is paid to this important topic at both national and European levels, and urges Estonia to actively defend its interests rather than just waiting for European Commission proposals.
