EU 'Needs Strong Carbon Market': Traders

The European Federation of Energy Traders (Efet) said February 3 the expanded European Union Emissions Trading Scheme (ETS) Directive, and the Effort Sharing Regulation, were key to the bloc's success in achieving its climate target cost-effectively.

A low carbon price means there is no need to decarbonise, as it could be cheaper to buy permits than to invest in technology such as carbon capture and storage. But if the price is too high, more industries could be driven out of the bloc. 

"With the reinforcement and expansion of the EU ETS, an EU-wide carbon price can become the long-term driver for decarbonisation across all sectors of the European economy, encouraging uptake of least-cost emission reduction technologies and facilitating energy system integration," it said. 

Efet does not take a view on which technologies should be adopted but it says there should be a timeline for a gradual expansion of the EU ETS to cover all fossil fuels.

First though there has to be "robust monitoring, reporting and verification for these new sectors and introducing transitional arrangements, or a pilot period." That means a separate EU-wide emissions trading system should be put in place for road transport and buildings or – preferably – for all fossil fuel use.

An artificial debate has arisen that pits electrons against molecules, although the pro-electron argument discounts the carbon emissions upstream of the generator, for example the plastics and concrete in the solar panel or wind turbine.

And electric vehicles count as zero-carbon in the European Union, giving them a fuel cost advantage over natural gas vehicles. This is the case whether the electricity is generated by coal, lignite or wind.

A January interview that NGW conducted with industry lobby group Zukunft Gas, which considers some of these problems in Germany, may be read here.