The UK has called on the EU to cancel supply of up to 1.8bn CO2
permits in the Emissions Trading Scheme, to force carbon prices higher
and encourage the private sector to invest in technology that cuts
The European Commission is proposing to delay the sale of up to 1.2bn
permits over the next three years to double current prices of about 8
euros, thereby encouraging investment in renewable energy and carbon
capture and storage plants. Its plan is to introduce the permits into
the market later, in the 2013-2020 trading phase of the $148bn scheme.
But Ed Davey, the British energy and climate change secretary,
yesterday used a speech to tell Connie Hedegaard, the European Climate
Commissioner, who was in the audience, to get the Commission to cancel
the allowances permanently.
He said that cancelling 1.8bn allowances would eliminate the surplus
that had built up over the past five years, and canceling 1.4bn permits
would put the EU on course to cutting emissions by over 30% of 1990
levels by 2020, 10 percentage points beyond its current goal.
"We need a price signal that delivers low carbon investment and that
is why I am using the current negotiations on the EU ETS to argue for
permanent cancellation of EU ETS allowances in order to drive up that
carbon price," Davey said.
"I welcome the recognition from the Commission that the ETS needs to
be strengthened. But I believe in order to give the certainty to markets
and businesses we need to go further than back-loading."
Britain needs to spend £110bn over the next eight years on investment
in low carbon technology and generation plant. The carbon price floor
proposals in the Energy Bill are intended to support this investment.
The higher the price of carbon, the lower will be the cost to the public purse and the impact on energy bills of this policy.
But the EU Commission carbon permit price increase plan is opposed by
European countries which rely heavily on coal, including Poland,
Hungary, Czech Republic and Slovakia. Officials from these countries are
due to meet on Monday to discuss how they can block the EU plan. If
even this plan cannot succeed, it is unlikely that Davey's proposal will
see the light of day.
Unless the law is amended the EU will sell about 1bn permits per year into the carbon market over the next eight years.
Ed Davey did suggest a strategy at the meeting yesterday. "We believe
the coalition of environmental progressives in Europe is actually quite
strong. That includes of course European governments but also important
industry figures across our continent, civil society, scientists, the
media and many more. So I think drawing together these parts of society
to fight climate change can really deliver for us."
Ed Davey made his comments at yesterday's launch at City Hall, London, of a pan-European communication campaign called 'A world you like. With a climate you like'.
This campaign, which was launched with the help of the actor Colin
Firth, seeks to put practical solutions at the centre of the climate
change debate and demonstrate how climate action can increase welfare
and bring economic benefits to European citizens.
It includes an interactive website that allows European citizens to
explore positive solutions to climate change that already exist in
European countries that also enhance quality of life. Users of the
website can then share these solutions.
It is led by the European Commission with the support of more than 70 organisations from across Europe.
Connie Hedegaard said at the launch: "The big challenge for us today
in Europe is how to combine the economy, the job situation and the
resource environment climate crisis. And I would argue that's the whole
message of this campaign. That it is doable."