Six major energy companies have come together to call on the European Union to develop a more effective emissions trading system or ETS.
CEOs from Fortum, Centrica, CEZ, ENGIE, Iberdrola and Innogy met in the EU Parliament in Strasbourg on Tuesday to call for greater ambition in the reform of the system, and a stronger carbon market.
The group said the ETS should be realigned to match the bloc’s 2050 emissions target and said post 2020 reforms represent a ‘unique opportunity to fix the market.’
Platts reports that the Magritte Initiative — a group of energy companies seeking coordinated energy and climate regulation — met with lead lawmakers in the EU Parliament, including Francoise Grossetete, first vice-president of the centre-right European People’s Party, and Pavel Poc, a member of the centre-left Socialists & Democrats party and vice-chair of the parliament’s environment committee.
“The EU must now turn its long term climate commitments into concrete measures in order to align the EU ETS with the objectives agreed in Paris,” Fortum said in a statement Tuesday, citing the EU’s agreed target to cut greenhouse gas emissions by 80-95 per cent by 2050 from 1990 levels.
“The [post-2020] reform proposed by the European Commission, whilst welcome, will not be sufficient to live up to Europe’s ambitious low-carbon agenda and to secure the shift to low carbon technologies,” Fortum said.
“A functioning EU ETS is critical to make the energy transition possible in a cost effective way while providing the private sector with clear and robust price signals to invest in low carbon and carbon free technologies,” it said.
Fortum said the EU must go beyond the existing backloading legislation, which delayed 900 million carbon allowances from auctions in 2014-2016, and the Market Stability Reserve, which is set to curb 12 per cent of the market surplus each year starting 2019.
The negotiations on the Phase IV period, running 2021-2030, “provide a unique opportunity to fix the European carbon market,” the company said.
“A significant increase in CO2 prices is necessary to unlock the full decarbonization potential of the power sector in the future,” Fortum’s statement concluded.
Final agreement on post-2020 legislation is expected in mid-2017.
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