Sian Crampsie
Three Nordic region utilities have called for action to strengthen the EU carbon market to better reflect the goals of the Paris climate agreement.
Fortum, Statkraft and Vattenfall have published a joint position calling for three immediate actions to be incorporated into the ongoing revisions of the EU's Emissions Trading Scheme (ETS).
The ETS is a cap-and-trade scheme and was designed to be the EU's main tool for tackling emissions, but an oversupply of carbon emission allowances coupled with a drop in energy demand has caused the price of carbon to fall.
There is therefore little incentive for investment in low carbon technologies and utilities and investors have for several years been calling for reforms to the ETS to support carbon prices.
The three utilities have called for the ambition of the ETS to be raised by increasing the linear reduction factor, which sets out the annual reduction in the allowable 'cap' on emissions. They also want the supply of ETS allowances to be reduced by taking into account national overlapping policies, and an embargo on the sale of allowances from the Innovation Fund until 2023 to reduce market distortion.
"The earlier the EU ETS is adjusted to reflect the long term EU climate goals, the lower the overall societal costs for reaching the long-term climate target will be, and the more predictability the EU ETS operators and investors will have," the utilities said in a statement.
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