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Companies urge EU to support back-loading

14 Feb 2013 12:46 GMT
Companies urge EU to support back-loading

London, 14 February (Argus) — The long-term survival of the EU emissions trading scheme (ETS) is at risk and policy makers must support a proposal to back-load allowances, a group of companies wrote in a joint letter today.

“The current carbon price will not stimulate low-carbon investments or innovation. Without agreement on the back-loading proposal, the price will fall further, thus threatening the long-term survival of the ETS,” the 30 companies said in the letter to members of the European Parliament, European Council and the EU's climate change committee. The companies, including Shell, German utilities Eon and EnBW and Norwegian state-owned utility Statkraft, support the European Commission's proposal to back-load 900mn allowances from the early years of phase 3 (2013-20).

Member states and EU lawmakers must take action to restore the credibility of the EU ETS, the companies said. Longer-term structural reforms are needed, but these will take time, and back-loading is needed to support the market now.

Back-loading will lay the groundwork for the longer-term structural measures, they said. The commission has proposed six options to strengthen the EU ETS, including a permanent removal of allowances, adding further sectors to the scheme, and a revision of the linear reduction factor.

A failure of the EU ETS would lead to a patchwork of 27 different climate measures, including regulations and taxation. If the EU can support measures to strengthen the scheme, then it will stimulate the economy by developing low-carbon industries while demonstrating global leadership on climate change issues, the companies said.

“We urge the environment committee to vote in favour of amendments supporting back-loading and the climate change committee to endorse the proposal as soon as possible so that the EU ETS as a whole remains the cornerstone of EU climate and energy policy.”

The European Parliament's environment committee will vote on 19 February on an amendment to the EU ETS directive, clarifying that the commission has the legal authority to adjust the auction schedule. No date is set for the vote in the climate change committee, but several member states are undecided.

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