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Environmental Finance

Environmental Finance

Environmental Finance is still the only independent global magazine offering comprehensive coverage of the financial impact of environmental issues on the business community.  Leading industry…

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Europe’s Energy Companies Call for Higher Carbon Prices

Some of Europe’s biggest energy and manufacturing companies have called for a strengthening of the EU Emissions Trading Scheme (ETS), in the wake of the release of the European Commission’s energy roadmap and ahead of a key vote on the EU Energy Efficiency Directive (EED).

Companies including oil and gas giant Shell and Danish utility DONG Energy wrote to the European Commission stating they fear for the future of the EU ETS because of record-low carbon prices of €6-7 ($7.80-9.20) seen this month.

“I think that if we could at lest get the price back up to the €20-range we’d be doing a lot better,” Sandrine Dixson Declève, director of The Prince of Wales's EU Corporate Leaders Group on Climate Change, told Environmental Finance.

The companies back the EED, but “call upon European institutions and member state governments to ensure that the EED or future policy measures are aligned with the ETS”, as increased energy efficiency measures might mean carbon prices will fall further.

“It is therefore imperative that these potential impacts are taken into account, and measures are put in place to ensure the viability of the ETS before it’s too late,” says the letter, also signed by French engineering giant Alstom.

Graeme Sweeney, executive vice-president of renewables, hydrogen and carbon dioxide (CO2) at oil major company Shell, said: “The CO2 price is currently too low to drive the essential energy efficiency measures and support the development of low-carbon technologies at the required speed and scale. To resolve this situation, we need an immediate and meaningful recalibration of the EU Emissions Trading System to drive up the price of CO2.” 

He added that this can be done by withholding allowances in Phase III (2013-20) of the EU ETS.

“This action will provide a strong CO2 price signal that business can respond to and ensure Europe makes the rapid progress needed to improve energy efficiency and support low-carbon technologies including both renewable energy sources and carbon capture and storage projects,” he said.

The European Parliament’s environment committee will vote next week on whether to withhold 1.4 billion EU allowances from Phase III, under an amendment to the EED.

Anders Eldrup, CEO of DONG Energy, also said that by withholding allowances “there is a chance to repair the ETS and make low-carbon investments”.
“Fair prices on CO2 along with price stability over time are imperative for industry to continue along the path to a green growth economy,” he added.

Several of the companies signing the letter to the Commission president Jose Manuel Barroso were among the firms which in June called for the EU to reduce emissions to 30% below 1990 levels by 2020, up from the current target of 20%.

By. Elza Holmstedt Pell

Source; Environmental-Finance




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