Image by Raw Pixels

Three decades of European policy designed to reward big polluters for fighting climate change have done little to protect the environment even as billions of euros have flowed into shareholders’ pockets, this investigation in France and Spain reveals.

Described by some as a “right to pollute”, the EU’s system of free allowances provides carbon credits to encourage the most polluting industries to reduce greenhouse gas emissions. The idea was that these rights to pollute would decrease over time.

In reality, companies have received quotas in quantities far higher than the CO2 they emitted, giving them surpluses they can resell on the carbon market. That is precisely what cement and steel manufacturers in France and Spain have done, this investigation shows.

The result is that companies and their shareholders are getting richer while their CO2 industrial emissions have hardly fallen over the past decade.

Analysis of cement and steel companies’ CO2 emissions and their financial transactions on the European Union Emissions Trading Scheme confirms that manufacturers have hijacked the system for economic and speculative purposes — and have done so legally, making a mockery of investment in the fight against global warming.

The journalists reveal that companies sold some of their carbon credits for several billion euros to absorb the shock of the 2008 financial crisis, using the allowances as a financial instrument.

They also show that some companies still have millions of euros of allowances up their sleeves. These carbon credits could be sold on the financial markets once the price of carbon has risen again, generating more profits for the companies — yet with no guarantee of reinvestment in the climate fight.

The findings are corroborated by testimony gathered from trade unionists, members of the European Parliament, local councillors, non-governmental organisations and industrialists, who for years have denounced the system’s opacity and authorities’ failure to stop the abuse of the free allowances.

The investigation was published in two parts — on May 30 and 31, 2023 — in Le Monde newspaper in France and El in Spain. The first part made the cover of the print version of Le Monde.

The team

Emmanuelle Picaud is a freelance journalist who lives in France. She coordinated the investigation. She has written for publications including Le Monde, BBC Future and Le Temps.

Guillaume Delacroix is based in Spain. He writes on environmental issues for Le Monde as a freelancer. He has also written for Geo magazine, Courrier International, Les Echos and Mediapart.

Luc Martinon is a freelance data journalist who lives in Germany. He has participated in other investigations for Le Monde, including the Forever Pollution Project.

Published stories

web: KontraBit