Tuesday, June 5, 2012

Dedicating ETS Revenue to Climate Change Mitigation

At the recent Beihang-DePaul workshop there was some discussion about what happens to revenue generated by the scheme. A recent Reuters article reported that EU climate officials want to see the funds used for climate change mitigation efforts, but States are not required to do so and to this point, only Germany has pledged its revenue specifically for that purpose. This has fueled criticism that the ETS violates Chicago Convention prohibitions against fuel taxes or charges unrelated to the provision of services, despite the CJEU's judgment to the contrary. EU Climate Commissioner Connie Hedegaard is quoted in the article acknowledging this criticism. Defining what is and isn't a tax is a murky issue, that may not be entirely resolved even if the funds are set aside to combat climate change. However, if the EU States can assure their detractors that ETS revenues won't go to States' general treasuries, it would significantly weaken one  of the strongest legal complaints levied against the measure. Unfortunately, getting all of the EU States to commit to earmark the funds for climate change does not yet appear close to happening.


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