Reasons to change the zero-rated criteria for biomass in the EU ETS

This study is published to co-inside with the European Commission's public consultation on revising the EU emissions trading system (ETS) for the period 2021-2030. The current EU ETS only accounts for smokestack emissions but erroneously rates the carbon emissions of biomass burning at zero. This is based on the assumption that the biomass emissions have been saved during the growth phase and accounted for in the land-use sector. Yet, as most biomass production lacks any kind of sustainability criteria and as land-use accounting is incomplete, this assumption is wrong and biomass usage can actually increase greenhouse gas (GHG) emissions.
This study reviews the current use of biomass under the EU ETS and proposes steps to ensure that biomass use is only incentivised when it delivers real GHG emissions reductions. Biomass emissions in the EU ETS are in the range of 90 to 150 million tonnes of CO2 equivalent, which represents between 4 and 7% of the overall emissions allowances. The ETS already has serious problems and fixing the biomass accounting error can be another step towards a stronger EU ETS and a more consistent EU climate policy.