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U.K. Carbon Price Won’t Quicken European Emissions Cuts, EU Says |
http://www.bloomberg.com/news/2011-03-27/u-k-carbon-price-won-t-quicken-european-emissions-cuts-eu-says.html
A U.K. effort to speed up cuts in greenhouse gases by setting a minimum price for carbon emissions will not translate into faster reductions in the rest of the European Union, the EU’s regulatory arm said.
The U.K. measure, which aims to wean British utilities from burning fossil fuels by setting a minimum price for carbon, won’t help the EU reach its targets for reducing greenhouse gasses more quickly, said Isaac Valero-Ladron, climate spokesman for the European Commission in Brussels. The reason is that other nations in the bloc will offset any additional emissions cuts in the U.K. by making fewer cuts of their own, he said by e-mail today.
U.K. Chancellor of the Exchequer George Osborne said on March 23 that Britain would set a minimum or floor price for carbon-dioxide permits of 16 pounds ($25.67) per metric ton of carbon in 2013. The EU cap-and-trade program has no floor or ceiling price.
The U.K. approach “will not deliver any additional emission reductions in the EU,” Valero-Ladron said.
The EU emissions trading system, the world’s largest, is the cornerstone of the bloc’s strategy to cut greenhouse gasses, which some scientists blame for global warming. It sets an EU- wide emissions limit and imposes pollution limits on more than 11,000 utilities and manufacturers in the region, including Royal Dutch Shell Plc (RDSA), Europe’s largest oil company, ThyssenKrupp, Germany’s biggest steelmaker, and Electricite de France SA, Europe’s No. 1 power generator.
Quota-Buster Fines
Companies emitting more than their quota must buy allowances on the market from those polluting less or pay a fine of 100 euros ($140.88) for each additional ton of discharges. The EU set the program’s average annual limit at 2.08 billion tons of carbon dioxide for the 2008-2012 period.
EU permits for delivery in December closed at 16.85 euros a ton on the ICE Futures Europe exchange in London on March 25, extending their gains to 18 percent this year. One allowance entitles the buyer to emit one ton of CO2.
EU Climate Commissioner Connie Hedegaard said last month the current carbon price doesn’t give a sufficient incentive for emitters to invest in the new technologies necessary for Europe to meet its 2050 goal of reducing domestic emissions by 80 percent.
The commission opposes introducing a floor price in the region’s cap-and-trade program, preferring to let the market determine the price even when European permits dropped to as little as 1 euro cent in 2007 amid an oversupply of allowances.
The best way for the EU to increase carbon prices and strengthen the incentive for companies to curb emissions is for the bloc to increase targets for cuts in greenhouse gasses, Valero-Ladron said.
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