ICIS points out complexities hindering emissions trading

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A leading market intelligence company says that a call by European utilities to use carbon pricing to fight climate change is understandable as the present emissions trading scheme is being impacted by overlapping policies.

At COP21 in Paris this week leaders from Europe’s leading utilities set up a group, called the Magritte Initiative, which includes E.ON and RWE, Enel, Engie and Iberdrola to persuade Brussels again as to the logical way the EU should decarbonise the power sector.
Map with European utilities
Jan Ahrens, Business Director Carbon Market Analytics at ICIS Tschach, told Power Engineering International, “The EU Commission sees its emissions trading scheme (ETS) as the centrepiece of decarbonisation, but there are still many overlapping policies.”

“For example, if emissions are reduced through the Energy Efficiency Directive polluters will be able to emit more in the ETS. So the different regulations are working against each other.”

“The multiple regulations on the same topic are also a regulatory hassle for companies and cause further inefficiencies, so it is no surprise that these European utilities are calling for one overarching approach.”

Ahrens says the US suffers from a similar problem in a less than straightforward approach.

“For example, transport fuel providers are covered by a myriad of regulations in California, and called earlier this year for a simpler, consolidated regulation in the shape of one strong ETS.”

Zoe Double, Head of Power at ICIS, said, “The UK has inflated their carbon price with an extra top-up tax, which has already resulted in less use of coal-fired generation, and many plants are shutting down as a result.”

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