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| From European Energy Review: http://www.europeanenergyreview.eu |
Energy executives ready to save Emission Trading Scheme
“The ETS system is bust – it is dead,” proclaimed Johannes Teyssen, CEO of Eon, at a high-level energy conference in Brussels this week. “I don’t know a single person that would invest a dime based on ETS signals.” Europe’s renewables and efficiency policies have only worked against the Emission Trading Scheme (ETS), not for it, he said. There’s a problem of policy coherence.
Bold statements and welcome drama at what could have been yet another high-level conference filled with empty words. But the best was yet to come. Teyssen became the first utility CEO to speak out in favour of fixing the ETS, and fixing it right now. “We do not need more regulation, we need to fix what we have [and] we need to start with fixing the ETS,” he said.
Nor was he alone. Fulvio Conti, CEO of Enel and president of Eurelectric, representing the European electricity sector, came out with the same message just a few hours later.
With their statements, Teyssen and Conti give implicit support to the controversial idea of taking out or “setting aside” carbon allowances from the European emission trading scheme (ETS)’s third trading phase from 2013-20. This would push up the carbon price – not an enticing prospect from the perspective of utilities, which will have to pay for all their emissions from 2013.
Bold statements and welcome drama at what could have been yet another high-level conference filled with empty words. But the best was yet to come. Teyssen became the first utility CEO to speak out in favour of fixing the ETS, and fixing it right now. “We do not need more regulation, we need to fix what we have [and] we need to start with fixing the ETS,” he said.
Nor was he alone. Fulvio Conti, CEO of Enel and president of Eurelectric, representing the European electricity sector, came out with the same message just a few hours later.
With their statements, Teyssen and Conti give implicit support to the controversial idea of taking out or “setting aside” carbon allowances from the European emission trading scheme (ETS)’s third trading phase from 2013-20. This would push up the carbon price – not an enticing prospect from the perspective of utilities, which will have to pay for all their emissions from 2013.
That is why utilities have so far opposed the idea of a set aside. Indeed, on the same day Jesse Scott, Eurelectric’s new head of sustainable development, made clear the organisation does not so far have an official position – whatever its president and vice-president – yes, Conti and Teyssen – may be saying.
So why the turnaround in position? Several answers emerged at a debate on the ETS in Brussels on Tuesday night. One is a growing fear of unilateral national efforts to patch up the carbon market. The UK will introduce a carbon price floor of £16 a tonne next year, rising to £30 by 2020, for example. There is also fresh talk of carbon taxes in other member states. And there are utilities’ balance sheets to consider, with substantial investments in carbon allowances making a higher carbon price, paradoxically, attractive.
Meanwhile, the energy-intensive manufacturing sector continues to oppose the move. They say the purpose of the ETS is to meet an emissions cap in a cost-effective way. “We find the ETS delivering exactly as it was supposed to deliver,” says Peter Botschek from chemical industries association Cefic.
If NGOs like Sandbag are correct in calculating the number of surplus carbon allowances held by these manufacturing firms due to the recession however (as output dropped so did emissions), we have to wonder whether their opposition is as firm as it appears.
BusinessEurope meanwhile, Europe’s main business association, is urging MEPs “on balance” to reject the set aside proposals. A set aside would “create further uncertainty and price volatility and establish a risky precedent of rapid political interference in the market”, it warns.
The Commission insists it would be a one-off intervention. But there is uncertainty too over what would happen to the set aside allowances. Only Parliament and member states together could definitively delete them – would this happen, in the end? BusinessEurope would prefer a broader, longer-term review of the ETS instead.
All eyes are now turned to the European parliament’s energy committee vote on 28 February. If they slot the idea of a set-aside into the energy efficiency directive, the Danish EU presidency will be forced to put it to member states for debate.
(Sonja van Renssen - svr.envi@gmail.com - reports from Brussels.)
So why the turnaround in position? Several answers emerged at a debate on the ETS in Brussels on Tuesday night. One is a growing fear of unilateral national efforts to patch up the carbon market. The UK will introduce a carbon price floor of £16 a tonne next year, rising to £30 by 2020, for example. There is also fresh talk of carbon taxes in other member states. And there are utilities’ balance sheets to consider, with substantial investments in carbon allowances making a higher carbon price, paradoxically, attractive.
Meanwhile, the energy-intensive manufacturing sector continues to oppose the move. They say the purpose of the ETS is to meet an emissions cap in a cost-effective way. “We find the ETS delivering exactly as it was supposed to deliver,” says Peter Botschek from chemical industries association Cefic.
If NGOs like Sandbag are correct in calculating the number of surplus carbon allowances held by these manufacturing firms due to the recession however (as output dropped so did emissions), we have to wonder whether their opposition is as firm as it appears.
BusinessEurope meanwhile, Europe’s main business association, is urging MEPs “on balance” to reject the set aside proposals. A set aside would “create further uncertainty and price volatility and establish a risky precedent of rapid political interference in the market”, it warns.
The Commission insists it would be a one-off intervention. But there is uncertainty too over what would happen to the set aside allowances. Only Parliament and member states together could definitively delete them – would this happen, in the end? BusinessEurope would prefer a broader, longer-term review of the ETS instead.
All eyes are now turned to the European parliament’s energy committee vote on 28 February. If they slot the idea of a set-aside into the energy efficiency directive, the Danish EU presidency will be forced to put it to member states for debate.
(Sonja van Renssen - svr.envi@gmail.com - reports from Brussels.)
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