The EU is expected to end the free allocation of some emission certificates for energy companies, in an attempt to cut greenhouse gases by 20 per cent by 2020 compared with 1990 levels. Although some eastern European companies that depend on coal production are likely to be granted a temporary reprieve, the biggest polluters from wealthy countries could be made to purchase carbon permits in full from 2013-20.
Chris Stubbs, Director at WSP Environment & Energy comments:
“Until now the EU Emissions Trading Scheme (ETS) has watered down the ‘polluter pays’ principle to the point of non-existence through the issuance of free allowances. The increased level of auctioning of allowances, something which has been hinted at for many years, should be supported.”
“All countries across Europe need to re-engineer their power sectors towards cleaner technologies. Whilst all nations start from very different bases, all need to start moving. France and Sweden are almost 'there', the UK and Germany have a fair way to go, Poland and others have even further to come. The French utilities (EDF) made the decision (with its government) many years ago to invest in a more expensive but lower carbon technology. Others have followed a path of lower capital cost, higher potential returns and/or have decided that their citizens should not have been exposed to high power prices; for example the French had high power prices at a time when others enjoyed cheaper, dirtier power.
“Exchequer revenues from allowance auctions should be directly recycled to those players willing to engage in re-engineering their capital bases away from dirty generation technologies. That way industry players will be pushed to either ‘pay up and shut up' or pay up and get on with investing in new technologies, and receive the cost of their allowances back as funding for the development of desirable technologies. In this way the large utilities are more likely to dance in time to governments' and the environment's tune - and less their own.”