The European Union should introduce “ambitious” targets for cuts in carbon emissions for 2030, according to Fortum Oyj.
Investment into energy production needs a “predictable policy and long-term objectives,” Anne Brunila, executive vice president of corporate relations and strategy at Finland’s largest utility, said at a seminar in Helsinki. “Unfortunately, the reality is different.”
The EU doesn’t have a legally binding reduction target for after 2020. European leaders have called for a cut of 80 percent from 1990 levels by 2030. Political risk and unpredictable regulation hamper investment by EU power utilities, while national objectives and a general lack of coordination undermine the EU Commission’s target for an internal energy market, Brunila said.
“Nearly all new power capacity being built is based on public subsidy,” she said. “By 2020, less than 2 percent of new production assets may be financed on market terms, and the rest funded by governments.”
Carbon prices in the world’s largest cap-and-trade program fell to a record 5.99 euros ($7.77) a metric ton in April after the financial crisis hurt industrial production and cut demand from industry for emission permits. That boosted the glut of allowances to almost a half of the average annual pollution limit in the system. Permits for December traded at 7.91 euros at 12:55 p.m. on the ICE Futures Europe Exchange in London.
“If the EU is to meet its goal of cutting emissions by 80 percent by 2050 from 1990 levels, a sufficiently robust interim target is needed for 2030, to prop up CO2 prices and trigger investments,” Brunila said in a separate interview. “Whether the target should be 40 or 50 percent, or something else, I cannot say.”
In March, Germany’s biggest utility EON AG said the bloc should adopt a target to cut greenhouse-gas emissions by 50 percent by 2030 to rescue the region’s carbon market.
The bloc needs to “backload,” or postpone the auctioning of carbon permits, and introduce a “structural fix” with a permanent set-aside of allowances to tackle the glut, Brunila said.