Norwegian energy firm Statkraft, along with 14 European utilities, has sent a second wake-up call on the Emissions Trading System (EU ETS) to Members of the European Parliament (MEPs).
The MEPs are set to vote vote on the ETS on 14 February.
In July 2015, the European Commission presented a legislative proposal to revise the EU ETS for the period after 2020.
The consortium of European utilities including Statkraft says that proposed revision is not sufficient to strengthen the ETS as EU’s core instrument for emissions reductions.
According to Statkraft, the ETS is failing to offer a robust carbon price signal to drive investments needed for low carbon electricity system and without further strengthening, the ETS can continue to fail at least in the next decade.
Statkraft claims that it has actively contributed in providing specific text in 2016 to EU Commission’s proposal on the ETS. It says that it has supported and suggested several important amendments for strengthening the ETS.
As part of a coalition Statkraft with industry partners including Centrica, CEZ Group, Dong Energy, EDF, EDP, Enel, Engie, E.ON, Fortum, Iberdrola, SSE, Uniper, Vattenfall and Verbund have sent an ‘electricty sector wakeup call’ with proposals.
These proposals include doubling the outtake rate of market stability reserve (MSR) to 24% from 2019 to address near term supply problem.
Also included in the proposals are increasing the linear reduction factor (LRF) to at least 2.4% for aligning with the EU's long term objective for 2050 and take into account interaction of the EU ETS with other Union and national climate and energy policies that impact the ETS balance.
It also proposes to allow for voluntary cancellation of allowances by Member States and cancel 800 million allowances placed in the MSR in 2021 and unallocated allowances in the future.
Revision of the ETS is expected to take place at the end of February. Final decision on the ETS directive might still take more time as the council needs consensus on a common ground. Thereafter, the Council, Parliament and Commission need to agree and adopt a final text.
Image: The headquarters of the European Commission in Brussels. Photo: Courtesy of Statkraft.