Magritte Group Calls for ETS Reforms
More should be done to reform the European carbon market beyond the overhaul of the EU Emission Trading Scheme (ETS) proposed by the European Commission, argued six CEOs, chairmen and top executives of companies belonging to the so-called Magritte Group at a public hearing in Strasbourg with members of the European Parliament on November 22.
They welcomed the ratification of the Paris agreement, and said it showed “once again the leadership of the European Union in the fight against climate change.” But they argued that more needs to be done to align the ETS with the objectives agreed in Paris.
“The reform proposed by the EC, 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,” the six said, citing the IEA’s recent WEO-2016 which said that almost $2.5 trillion must be spent in 2015-2040 to reach EU climate goals, and that the energy sector accounts for 60% of emissions covered by ETS.
Magritte Group top executives in Strasbourg on Nov.22: left to right, Ivo Hlavac (CEZ), Pekka Lundmark (Fortum), Ignacio Galan (Iberdrola), Gerard Mestrallet (Engie), Peter Terium (Innogy), Iain Conn (Centrica), (Photo credit: Engie)
“Policymakers must go beyond measures taken so far to strengthen ETS (through “backloading”/ the Market Stability Reserve) and the current proposal under discussion. The negotiations of its “4th phase” (2021-2030) provide a unique opportunity to fix the European carbon market,” they said.
A combination of short and long term measures to fix the ETS is needed, with new initiatives going beyond the current texts under discussion, they said, arguing that these should significantly increase CO2 prices in order to unlock the full decarbonisation potential of the power sector in future.
Measures adopted at EU level should be preferred over uncoordinated national initiatives that undermine the ETS, they said, combined with efficient provisions to combat ‘carbon leakage’, the phenomenon where industries in the EU are priced out of trade by dirtier economies.
The six chiefs – from Centrica, CEZ, Engie, Fortum, Iberdrola and Innogy – were met by EC vice-president Maros Sefcovic and climate action commissioner Miguel Arias Canete. Four other firms are also Magritte members: Enel, Spain's Gas Natural, Dutch GasTerra, and Portugal's EDP.
However original founders in 2014 such as Eni and OMV are no longer members and nor is Uniper, the now-demerged generation and fossil fuel business of another founder, E.ON. Critics say the EC has allowed such firms to set too much of the energy/climate change agenda, or that the cost of some of their proposals will hit consumers and energy-intensive industries.
In other news, Eni said November 22 it had signed an agreement with US giant GE to develop renewable energy projects and hybrid solutions with a focus on energy efficiency. They plan to jointly identify and develop large-scale power generation projects from renewable energy sources.
Mark Smedley