9 EU states urge CO2 price floor to meet climate goals
14 December 2018 | Trading
Europe should introduce a CO2 price floor to complement the EU ETS and extend carbon pricing to sectors not covered by the market, a group of nine EU member states said late on Wednesday.
This would send a “clear long-term signal” to investors to incentivise cost-effective greenhouse gas emission reductions, added the group of energy ministry representatives from Denmark, France, Finland, Ireland, Italy, the Netherlands, Portugal, Sweden and the UK.
Although recent reforms to strengthen the ETS were “a step in the right direction”, explicit carbon prices presently only covered 52% of all EU emissions.
“In some cases the carbon price can be too low and/or too volatile to trigger effective decarbonisation,” the group added.
The benchmark Dec 18 EUA contract was last seen trading around EUR 20/t but some experts believed it needed to be double that to promote an effective transition to renewables, with the EU goal for cutting emissions standing at 40% on 1990 levels by 2030.
“Predictable price signals”
In order to reach long-term climate objectives the “overall ambition, coverage, and predictability” of carbon pricing should be improved through mechanisms that “would provide robust and predictable price signals for covered sectors across the economy”, said the group of nations.
“Such mechanisms, at each country’s discretion, could include carbon price floors for electricity generation to complement the EU ETS, or carbon pricing in non-ETS sectors.”
“We want all of Europe to join us in retiring coal and get wind turbines turning. The best way to do this is to put a price on CO2,” Danish energy minister Lars Lilleholt said in a separate statement.
Denmark previously said it would exit coal by 2030, while other signatories such as the UK, France and the Netherlands have, or are planning to implement, a national carbon price floor.
The nine countries timed their initiative to coincide with the UN climate summit in Katowice, which ends on Friday.
Source: Montel News