EON Says EU Should Create Carbon Target of 50% Cut by 2030
The European Union should adopt a target to cut greenhouse-gas emissions by 50 percent by 2030, rescuing the region’s carbon market, said EON AG. (EOAN)
Without reform, the market will stagnate, Johannes Teyssen, chairman of the utility’s management board, said today in a briefing with reporters in Berlin.
“The emissions-trading system in Europe is a ‘dead man walking’, the system is mortally ill,” Teyssen said today.
He said he’s started canvassing Guenther Oettinger, the EU energy commissioner, to consider the greenhouse gas target.
Poland on March 9 blocked a move by other nations to detail the region’s climate-protection plans after 2020. The EU parliament voted for a set-aside of an unspecified volume of carbon allowances, which may temporarily support prices by eroding an oversupply through this year and beyond.
A 2030 target would encourage companies to invest in CO2- reducing power stations and factories, Teyssen said. This would avoid “cannibalizing and destroying” the market and “infuse strength and life” into it. The EU should also adopt a floor price for allowances that would be adjusted annually, rather like the European Central Bank sets interest rates.
Alternatively, a tax could be introduced on CO2 emissions. Teyssen said he has “relatively wide support” from the BDI, a lobby group for German industries. The idea of a new 2030 target would smooth emissions reductions between now and 2050, he said. Current rules would encourage cuts mainly after 2020.
‘No Sharp Rise’
EON’s plan would not lead to a sharp rise in the cost of carbon, depending where lawmakers set the floor price or tax, he said.
EU carbon permits have dropped 61 percent in the past year and were up 1 percent today at 6.94 euros ($9.18) a metric ton on the ICE Futures Europe exchange in London as of 11:25 a.m.
Emissions from factories and power stations in the program were probably 1.963 billion metric tons last year, an increase of 1.3 percent from the level in 2010, Mark Lewis, an analyst in Paris with Deutsche Bank AG (DBK), said March 19. Emissions data from the EU program for last year is expected on April 2.
In the power sector alone, generation from natural gas dropped 13 percent for the year to 459 terawatt-hours, while hard coal jumped 8.7 percent, according to the bank. Total fossil fuel-based production decreased 3.6 percent and total generation including non-fossil sources declined 3 percent.
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