E.ON suggests a set of measures designed to advance the emissions trading scheme at European level and to increase its efficiency and transparency as the only way of achieving the EU’s ambitious climate targets without jeopardising Europe’s competitiveness in comparison to other industrial regions.

Among its recommendations the company says that similar installations should be treated the same throughout Europe, irrespective of their location, operator and age. Consequently, allocation rules and reduction targets for sectors covered by emissions trading must be fixed centrally for all member states. It is also essential that the publication of emissions data is coordinated centrally so that market transparency is ensured.

Furthermore, the European emissions trading system should be linked to other greenhouse gas trading systems in order to achieve worldwide emissions trading in the medium-term, the company says.

Following European harmonisation and increased transparency and efficiency, conditions would exist for moving from the free allocation of emission allowances to an auction system. This transition should be phased and long-term but to increase the efficiency and credibility of emissions trading as a whole, uniform auctioning must be introduced throughout Europe. At the same time, all market actors and all installations, both new and existing, must be included in the auctioning. The proceeds could be used to cut energy taxes. Simultaneously, other political climate protection instruments that overlap with the emissions trading system must be dismantled throughout Europe if there is any so that energy consumers do not have to pay twice for the cost of climate protection.

The allocation rules must also be designed so that there is no incentive to keep old installations running longer than would have been planned in the absence of emissions trading. At the same time, new installations must not be given preferential treatment leading to the hasty construction of power stations achieving minimal progress, thus leaving no scope for even more advanced installations whose technology is still under development.

“Climate protection and social prosperity are compatible if we systematically develop emissions trading further. We are convinced that a well-functioning market for CO2 allowances is the most efficient way of giving companies incentives for investing in climate-friendly technologies,” said the company’s chief executive Wulf H. Bernotat.

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