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Power industry worries about new sectors for EU ETS


25 May 2021 15:23




25 May 2021 15:23

(Montel) Representatives of European power companies expressed wariness of proposals to extend the EU’s carbon market to new sectors like heating and transport during an online industry conference on Tuesday.

“The EU ETS is working as an effective tool to continue to decarbonise power,” Emma Pinchbeck, CEO of UK energy industry trade association Energy UK, told the 2021 Power Summit.

“We don’t want to see that disrupted, and therefore a parallel market seems to be the sensible way to bring other sectors in. That gives us time to evaluate whether it is appropriate for those sectors and make adjustments before they go into the pool.”

The European Commission plans to unveil proposals on 14 July to strengthen and extend the carbon market as a tool to help cut emissions by 55% on 1990 levels by 2030.

European Commission president Ursula von der Leyen has expressed a desire to price carbon emissions for buildings and vehicles and eventually fold these sectors into the EU ETS. 

Critics have suggested this could lead to sharply higher carbon prices for existing sectors without making much impact on the new ones.

David Bryson, chief operating officer of German utility Uniper, gave the example of carbon prices of EUR 200-300/t which his company estimates would be needed to invest in certain hydrogen technologies deemed crucial to decarbonising Europe’s economy by mid-century. 

“The EU ETS is one of our levers – we have a number of levers we need to use,” he said.

Contracts for difference offered a way of extending carbon pricing to other sectors to achieve specific goals without disrupting existing industries too severely, he added.

Beatriz Yordi, the EC's climate action department's director for European and international carbon markets, told the conference any efforts to extend carbon pricing to buildings and transport would not invalidate existing local regulations that deal with these sectors.

Separately, former Polish environment minister Marcin Korolec attacked the idea, in a commentary for media network Euractiv on Tuesday, for disproportionately hitting Europe’s poorest citizens. 

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