EU ETS cap must be tighter: utilities

OREANDA-NEWS. June 21, 2016. A coalition of 10 European utilities has called for a tightening of the cap in the EU emissions trading scheme (ETS) to reflect the EU's "long-term" climate goals.

The EU Council and the European Parliament's environment committee are discussing legislation that will govern the operation of the ETS in its 2021-30 phase four this week.

The European Commission proposal to reduce the ETS cap by 2.2pc/yr would reduce emissions to 84pc below 2005 levels by 2050, under the commission's impact assessment. But its roadmap to a low-carbon economy originally envisioned a 90pc cut, which would require an increase in the linear reduction factor to 2.4pc/yr.

"Although measures taken so far to strengthen the ETS have moved in the right direction, they are insufficient to live up to Europe's ambitious low-carbon agenda," the utilities' statement said. A number of proposals under discussion must be adopted if investors and firms are to recover confidence in the ETS, it said.

In addition to the higher linear reduction factor, these include — allowing voluntary cancellation by EU member states, allowing adjustment of auctioning to take into account the effect of overlapping policies, a price corridor, and an increase in the rate at which the market stability reserve removes surplus allowances.

"Measures at the EU level should be preferred over unco-ordinated national initiatives," it says.

The statement is signed by: Czech firm Cez, Denmark's Dong, EDF and Engie of France, Portugal's EDP, Italian firm Enel, Finland's Fortum, Iberdrola of Spain, Norway's Statkraft and Swedish firm Vattenfall.