Euratom myth-buster

Berlaymont flags outside

In the current UK debate about Euratom, there are three common errors.

Responding to each in turn:

1. “Membership of Euratom is possible outside of EU membership”

Though the European Union and Euratom Community each have “legal personality”, i.e. incorporation, it is not possible for any state to be in one without being in both.

Since the 1965 Merger Treaty the EU and Euratom have shared the same staff, the same budget and the same set of institutions (Parliament, Council, Commission etc). Subsequent EU treaties consolidated this approach.

When for example (anti-nuclear) Austria joined the EU in 1995, it was made clear that this could only be possible if Austria acceded to Euratom at the same time.

In 2003 in the constitutional convention a proposal to merge the two legal personalities was rejected because several EU member states no longer supported the promotional aspects of Euratom. Later, in Declaration 54 attached to the 2007 Lisbon Treaty, five states said that Euratom needs to be updated as soon as possible.

Most recently, in preparing for Article 50 talks with the UK, the 27 remaining member states stated clearly and repeatedly “no cherry-picking” from among the acquis.

2. “Associate membership is an alternative option.”

Those who promote this idea confuse the concept with the “association agreements” that link some third countries to some Euratom activities. Most commonly such agreements involve Chapter 1 research programmes.

Such collaborations are not the same as membership or associate membership and do not usually include in their scope activities under other chapters such as safety (Chapter 3), supplies (Chapter 6) and safeguards (Chapter 7). Altogether Euratom has ten functional chapters.

A new Euratom association agreement with the UK could be done following the conclusion of an Article 50 (Withdrawal) agreement. The opening of talks on such an agreement is conditional on “sufficient progress” in the Article 50 talks.

Transitional arrangements, if any, would be done under the withdrawal agreement rather than under any subsequent agreement on future relations.

3. “Trade in medical isotopes will be impacted by the UK’s departure”

This is also a red herring. Euratom does not place any export restrictions on medical isotopes so, save for the weaker exchange rate, the future trade in such goods will not be affected if Brexit goes ahead. ❧ 

UPDATE, 11.45 am 25 July:

Following-up on point 3, I was asked if  isotopes for medical use were subject to safeguards controls in a similar way to the materials used in nuclear fuels. The short answer is no. For materials the scope of safeguards under Chapter 7 is essentially only uranium, plutonium, thorium and corresponding ores etc, as defined in Euratom Article 197. The scope of the nuclear common market under Chapter 9 is defined in Annex 4 and is very much wider than that of Chapter 7. On other words, medical isotopes are subject to Chapter 9 provisions but not to those in Chapter 7.

MEP roll-calls re ETS vote


Strasbourg saw 14 roll-call votes yesterday as MEPs considered reforms to GHG emission cap & trade rules (EU ETS) at first reading.

A summary appears below including specific links to with the individual votes of all MEPs participating. According to the website, group loyalty ranged between 77% to 93%. Winning margins ranged between 61 vote and 590.

All amendments refer to the basic act, Directive 2003/87 as amended, save for the first which refers to the 2015 MSR Decision.

For – Against – Abstentions

Amendment 139: Double MSR surplus transfer rate, 12% to 24% (ENVI)

Article 1, Paragraph 5, after subparagraph 1 

544 – 140 – 14 – Adopted – majority 404

More info.

Amendment 27: Amend scope re import inclusion scheme (ENVI)

Article 2, Paragraph 1

248 – 424 – 20 – Rejected – majority 176

More info.

Amendment 146: Add social reporting (GUE)

Article 6, Paragraph 2, after point d

112 – 573  – 16 – Rejected – majority 461

More info.

Amendment 150: Re-base cap & 2.4% LRF (Greens)

Article 9, Paragraph 2 and 3

245 – 441 – 13 – Rejected – majority 196

More info.

Amendment 40: LRF 2.4% (ENVI)

Article 9, Paragraph 2 and 3

315 – 376 – 7 – Rejected – majority 61

More info.

Amendment 42: Conditional reduction of auction share in favour of more free allocation (ENVI)

Article 10, Paragraph 1, subparagraph 2

597 – 98 – 6 – Adopted – majority 499

More info.

Amendment 47: 800m MSR cancellation (ENVI)

Article 10, Paragraph 1, subparagraph 4

506 – 172 – 15 – Adopted – majority 334

More info.

Amendment 60: Raid NER for free allocation

Article 10a, Paragraph 1, subparagraph 1 and 2

637 – 47 – 17 – Adopted – majority 590

More info.

Amendment 84: Import inclusion scheme

Article 10b, after paragraph 1

237 – 446 – 17 – Rejected – majority 209

More info.

Amendment 144: Consider border adjustments after carbon leakage review (EPP)

Article 10b, after paragraph 1

576 – 112 – 10 – Adopted – majority 464

More info.

Amendment 12, 1st part: carbon leakage

Recital 7

621 – 48 – 31 – Adopted – majority 573

More info.

Amendment 12, 2nd part: import inclusion scheme

Recital 7

253 – 425 – 16 – Rejected – majority 172

More info.

Amendment 13: Free allocation criteria

Recital 8

584 – 77 – 38 – Adopted – majority 507

More info


379 – 263 – 57 – Adopted – majority 116

More info.

Kaczyński carping


According to Reuters on Monday Poland’s Council delegation is threatening legal action if a new environmental law on national climate targets is adopted using majority voting.

While Warsaw has complained before in this way — a 2016 case is pending before ECJ — a quick look at the longer record of EU climate law-making provides a better picture on what to expect.

Between 2002 and 2015, altogether eighteen climate laws were agreed between the EU institutions. All used the ordinary legislative procedure, also known as ‘co-decision’, which includes Council majority-voting. Sixteen of the laws were adopted since Poland joined the EU on 1 May 2004. Only one, the most recent, has been challenged, by just one delegation, and never have any been overturned.

The 2009 law on national greenhouse gas pollution caps, which performs the same function as the present proposal, was not challenged by any member state and is not questioned by Poland today even though it continues to apply until end 2020.

All of this points to the Kaczyński government, elected 1.5 years ago, as the source of the obstructionism. Any grievance is political, not legal. Poland’s coal industry is already contracting as uneconomic mines close.

By blaming Brussels, Kaczyński seeks to shift attention from necessary changes in Poland that in reality are already well underway.

EU climate protection laws adopted by co-decision and majority voting

ETS (GHG cap & trade) – 8 laws

Non-ETS – 1 law

Vehicle standards (cars & vans) – 4 laws

F-gases – 2 laws

Monitoring & reporting – 3 laws

The above lists do not include environmental laws in areas other than climate protection, those rules adopted by the EC using delegated powers or international climate agreements that in general all tend to use the same Council voting rules and thresholds. ❧ 

Fast-track MSR introduction

EIGHT, five, six, four, and now five euros per tonne. Price volatility so far this year show how Europe’s emissions cap and trade market (ETS) remains bumpy, weak and thus ineffective at changing behaviours. The plot line below is hardly a curve.


2016 EUA spot (€) via EEX.

But weren’t such instabilities supposed to have been fixed? An ETS ‘market stability reserve’ (MSR), agreed last year and operating as from 2019, is intended to adjust allocation, stabilise supply-demand balance and so steady prices.

Evidently it is yet to have such an effect. Consequently levels of confidence in a meaningful ETS contribution to urgent EU GHG emission reductions and clean-tech innovation are back in the doldrums.

If the scheme is not to be abandoned then the next few months are crucial. Five or more years of waiting would be too late as in all quarters political support ebbs away. Trust in ETS should be restored without delay, within the proposed amending act now before Parliament and Council.

Ah … but if only it were so easy,” some may reply.

It’s true the MSR negotiations were sometimes fraught. But in the end EU institutions did find a reasonable outcome on its general design, including start date, trigger thresholds, treatment of back-loaded and other unused allowances, reporting and review. None of these elements need now be re-opened.

However by far the biggest issue the ETS still struggles with is the huge surplus of excess tickets swamping the market. Under present rule, it will take around a decade to move most of these to the reserve, thus prolonging the market instability pictured above.

But what if initial MSR transfers could happen more swiftly? What if e.g. instead of 12% each year of surplus allowances moved from auctions to reserve  (applied at 1% per month) this rate is doubled for the first three years (24% per year, 2% per month)?

The impact of such an amendment, assuming 2.7 billion allowances in 2017 circulation, would be an extra 750 million tonnes approximately set aside, on top of a similar amount under the exiting rule. If a 24% rate ran for 4 years, the extra would be around 900 million.

Here is how the amendment could look in the present proposal :

Amendment X
Article X new
Amendment to Decision (EU) 2015/1814

Decision (EU) 2015/1814 is amended as follows:

In Article 1 the following paragraph is inserted after paragraph 5:

5a. In derogation from the first sentence of paragraph 5, for the years 2019, 2020 and 2021, the number of allowances that shall be deducted from the auctioned allowances and placed in the reserve shall be equal to 24% of the total number of allowances in circulation.

Such an amendment can in theory be tabled by any EU institution although in practice EP 1st reading committee deadlines have passed. Therefore this points to one or more Council delegations or the Commission that should act first.Since in terms of a reversal to single market harmonisation the EC has the most to loose if ETS is lost, it should act now. ( Article 250 empowers the Commission to amend proposals at any time during negotiations.)

Both senior EC officials and the EP rapporteur Ian Duncan have in recent days signalled that MSR adjustment is an option that should be considered.

Lastly it is worth reminding that an MSR amendment will remain consistent with the 2030 framework agreed by the European Council two years ago, in particular section 2.3 which specifically endorses “an instrument to stabilise the market“. ❧

2015 ETS revenues highest yet

Last year was a record-breaking year for ETS revenues with 27 EU member states sharing €4.88 billion in total revenues, around 50% more than the previous year and beating the previous record set in 2013 by more than €1.2 billion.

ETS and carbon trading : Vapor rises from the Grangemouth Refinery

Total phase three (2013-2020) ETS revenues now stand at €11.7 billion among member states and €13.8 billion if EIB-held NER-300 innovation funding is added.

The table below shows the country-by-country data. Ireland, the only country still not to have met an end-July reporting deadline, could add approximately €40 million more.

Country 2013 (€m) 2014 (€m) 2015 (€m) Total (€m)
Austria 55.8 53.6 78.6 187.9
Belgium 115.0 97.1 141.6 353.7
Bulgaria 52.6 36.4 121.8 210.9
Cyprus 1.9 0.7 1.4 4.1
Czech Republic 80.7 55.7 111.5 247.9
Germany 790.3 750.0 1,110.2 2,650.5
Denmark 56.0 48.1 71.3 175.5
Spain 346.1 330.1 489.5 1,165.7
Estonia 18.1 7.4 21.3 46.8
Finland 67.0 63.5 93.8 224.2
France 219.2 215.3 312.1 746.7
Greece 147.6 131.1 195.2 473.9
Croatia 0.0 0.0 87.0 87.0
Hungary 34.6 56.5 83.3 174.4
Ireland 41.7 36.0 Late report 77.7
Italy 385.9 408.6 543.4 1,337.9
Luxembourg 5.0 5.2 6.8 17.0
Lithuania 20.0 17.3 28.4 65.7
Latvia 10.8 10.2 15.3 36.3
Malta 4.5 3.9 6.2 14.6
Netherlands 134.2 131.1 187.3 452.6
Poland 244.0 78.0 132.8 454.9
Portugal 72.8 67.1 99.2 239.1
Romania 122.7 97.9 195.2 415.8
Sweden 35.7 33.6 52.4 121.7
Slovenia 17.7 16.6 24.4 58.8
Slovakia 61.7 57.6 84.5 203.8
UK 485.4 401.5 586.3 1,473.1
TOTAL 3,627.0 3,210.2 4,880.9 11,718.1

Source: EEA ROD

The revenue increase is no surprise given higher EUA prices over the period. The EEX chart below shows the trend over the last four years. Given the price instability we’ve witnessed this year the 2015 record is unlikely to be beaten for some time.

EUETS 4-yr price chart EEX

Higher prices last year were sufficient to counter-act the effect of 300 million allowances transferred out of auction schedules and into the new Market Stability Reserve (MSR) by way of the 2014 ‘back-loading’ decision, the schedule of which is shown here (Annex 4).

EUETS annex 4 - backloading schedule

Revenues includes those from the aviation sector, which are listed under a separate sub-heading in the detailed country reports. Each is accessible by clicking on the country name above.

The Commission is expected to published formally the 2015 revenues as part of its annual carbon market report due in October or November.❧

20 July package, all links

trio EC

Links for the ‘non-ETS’ Commission climate legislative proposals &c adopted on 20 July 2016. For language translations, interpretation &c, click though on respective pages.

Press releases & background memos

Press conference videos

EC legisaltive proposals

Other EC communications

EC impact assesments



Background studies

EC road-maps

EU ETS income data by country

coal power station sunset

Since 2013 EU member states are required to report annually on revenues received from auctioning allowances used in the greenhouse gas emissions trading scheme (EU ETS).

The table below shows each country’s total income for 2013 and 2014, as recorded in the Reporting Obligations Database. Over two years Germany received the most cash at €1,540 million while Cyprus the smallest at €2.7 million.

While the data shown is not new, it is the first time that these multi-annual totals have been published together, as usually the Commission prefers to play down this issue.

Country 2013 (€m) 2014 (€m) Total (€m)
Austria 55.8 53.6 109.3
Belgium 115.0 97.1 212.1
Bulgaria 52.6 36.4 89.0
Cyprus 1.9 0.7 2.7
Czech Republic 80.7 55.7 136.4
Germany 790.3 750.0 1,540.3
Denmark 56.0 48.1 104.1
Spain 346.1 330.1 676.2
Estonia 18.1 7.4 25.5
Finland 67.0 63.5 130.5
France 219.2 215.3 434.6
Greece 147.6 131.1 278.7
Croatia 0.0 0.0 0.0
Hungary 34.6 56.5 91.1
Ireland 41.7 36.0 77.7
Italy 385.9 408.6 794.5
Luxembourg 5.0 5.2 10.1
Lithuania 20.0 17.3 37.3
Latvia 10.8 10.2 21.0
Malta 4.5 3.9 8.4
Netherlands 134.2 131.1 265.3
Poland 244.0 78.0 322.0
Portugal 72.8 67.1 139.9
Romania 122.7 97.9 220.6
Sweden 35.7 33.6 69.3
Slovenia 17.7 16.6 34.4
Slovakia 61.7 57.6 119.3
UK 485.4 401.5 886.9
TOTAL 3,627.0 3,210.2 6,837.2

The scope and characteristics of the ETS means that majority of revenue comes from firms burning coal to make electricity. This shows in the data for example by comparing UK with France, where in the later country nuclear’s share of the power mix is much larger. The UK also shows a big drop from one year to the next triggered by the ongoing closures of many large coal-fired power plants.

Between 2013 and 2014 the total revenue fell by £416 million, even when carbon prices were higher in the later year. The main reason for this I suspect is an phase-in of Article 10c schemes, whereby certain member states direct utility companies to invest in certain related objectives as a condition for temporary free allocation. These national plans only started during 2013 will have taken some time at the start to build-up momentum.

The chart total of €6,837m is not the overall ETS revenue to date. As well as small amounts raised in phase 2 by a few countries, the European Investment Bank auctioned 300 million phase 3 allowances between 2011 and 2014 raising €2,157 million for green-tech demonstration support. Adding this amount brings the overall phase 3 total to date to €8,994 million.

I will update for 2015 and subsequent years after the respective filings are done. ❧