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Fortum Urges Permanent Deletion of EU CO2 Permits to Fix Glut

Nov. 14 (Bloomberg) -- The European Union should remove carbon permits permanently to fix a supply glut and prop up prices, Esa Hyvaerinen, a Fortum Oyj spokesman, said by e-mail.

The comments come after the European Commission, the regulator of the European Trading System, today released a report on long-term options to address oversupply, complementing a proposal on Nov. 12 to delay sales of credits in a process known as backloading.

On EU proposals:

“The Commission’s proposal to postpone auctioning of 900 million allowances most likely will not impact the market price significantly nor decrease market volatility. However, we encourage the Commission to finalize the backloading as soon as possible, followed by a permanent cancellation of allowances.”

On low prices for CO2 permits:

“This is largely a result of the economic downturn, but also due to the intervention by overlapping, mostly national, policy measures that have watered down the ETS mechanism. Fortum considers it a serious shortcoming that the overlapping policy measures have not been discussed at all as reasons for the oversupply in the Carbon Market Report.”

On 2030 targets:

“Regarding the structural reform, an ambitious target for 2030 is Fortum’s key priority instead of increasing the 2020 target. Long-term targets combined with the tightening of the ETS cap starting from 2021 could reduce the policy risk and stimulate investments in the low-carbon future.”

To contact the reporter on this story: Torsten Fagerholm in Helsinki at tfagerholm@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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