IIGCC urges EU ministers to revise the Emissions Trading Scheme

 Ahead of a meeting of EU ministers on April 19th, to discuss the future of the European Union’s Emissions Trading Scheme (ETS), the Institutional Investors Group on Climate Change (IIGCC), whose members represent EUR7.5trillion in assets under management, urged ministers to consider changes which would ensure the continued viability of the ETS. The IIGCC makes three recommendations EU ministers should consider to support an improved Emissions Trading Scheme:

• A change in the overall level of ambition of the EU’s 2020 emissions target, with a commensurate change in the EU ETS allocations


• An immediate action to define and implement, as soon as possible, a one off set- aside of carbon credits in order to remove oversupply from the system


• Pre-agreed review processes to cope with unforeseen economic circumstances in future
  
  Stephanie Pfeifer, Executive Director of the IIGCC, said:
  
  “The European Union’s Emissions Trading Scheme is not producing the outcomes originally envisaged and needs fixing.
  
  “The EU ETS was expected to support emission reductions by catalysing innovation and driving investment in low carbon solutions. This is not happening. Carbon credit prices have fallen dramatically as a result of oversupply in the system. At under seven euros per tonne, the carbon price is not even high enough to support a switch from coal to gas.
  
  “As long-term investors, IIGCC members are concerned that current exceptionally low carbon prices fail to create strong enough conditions for private investors to allocate capital to low- carbon energy sources. With the potential for climate change to have major negative impacts on the economic systems in which they operate and on the assets in which they invest, investors are calling for decisive action
  
  “When EU Ministers sit down to discuss the future of the carbon market at a meeting tomorrow, 19 April, we urge them to show leadership and implement measures which boost the carbon price and help stimulate private investment in low carbon solutions.”

Carbon Capture and Storage - New research from UKERC shows tough road ahead to realise potential.

Following the government’s announcement of £1bn to support the development of Carbon Capture and Storage (CCS) the UK Energy Research Centre today publishes a report which is cautiously optimistic about the technology. It identifies four key issues which the government must address:

1. Choice of technologies. There are several different options but so far no clear indication of which will be best. For the moment the government should not attempt to save money by backing a single solution.


2. There must be financial support, not financial regulation. Penalties for emissions cannot be effective until abatement technologies exist.


3. Developing the technology will take a long time and will essentially be unpredictable. There may be a tipping point where it becomes clear that public money would be better spent on other methods of reducing carbon emissions.


4. There will be a long-term storage liability. Government must take lessons from the nuclear industry and protect the interests of future generations.

Clearly CCS is no quick fix. We hope that the government will also look at short-term cost-saving projects to cut carbon and improve energy efficiency without waiting for CCS to prove itself. (Or not)

 

The full text of the report can be found at
http://www.ukerc.ac.uk/support/tiki-read_article.php?articleId=1881