A campaign group has warned that the European Union’s Emission Trading Scheme (ETS) could commit the region to increasing greenhouse gas emissions over the next decade instead of restricting them.

UK-based Sandbag has released a report that shows that the ETS is on course to deliver emission savings of 32 million tonnes at the most for the 2008-2012 trading period, in spite of covering 12 000 installations with annual emissions of 1.9 billion tonnes.

Regulating a single power station over the same period could have a greater impact, says the organization.

At fault is the weak emissions cap imposed in the 2008-2012 trading period that has become an over-allocation of permits because of reduced energy demand in the recession. The ETS rules will allow the huge volume of unused permits to be carried over into the next phase of the ETS that runs from 2013-2020. As a result, the EU may actually become trapped into a continued high carbon economy, says Sandbag.

“The recession has rendered the ETS caps thoroughly obsolete,” says Sandbag campaigner Damien Morris. “Unless they are adjusted to reflect our new circumstances, the EU ETS risks becoming an albatross around the neck of European climate policy, a carbon trap rather than a carbon cap, obstructing the mitigation efforts of the EU and its Member States.”

The organization believes that an effective carbon trading scheme could deliver deep cuts in carbon emissions. It has suggested a number of ways in which the EU ETS could be fixed, including an increase in the carbon reduction target from 20 per cent to 30 per cent by 2020 to compensate for the permits that will be carried over.

Sandbag notes that achieving a change in the ETS will face stiff resistance, particularly from carbon “fat cats” – companies that have received large over-allocations of permits and which stand to profit from their sale. It says that political leaders need to withstand “exaggerated industry lobbying and agree to tighter caps”.

Sandbag wants caps for the next trading phase, from 2013-2020, to be based on actual emissions and not on the permits allocated. Some 1.4 billion tonnes of permits would have to be cancelled from the scheme to achieve this.