Energy firms, investors rally behind EU CO2 market fix

14 Feb 2013 10:06 Last updated: 14 Feb 2013 11:05

LONDON, Feb 14 (Reuters Point Carbon) – Over 120 investors, companies and organisations have written to European lawmakers in a last ditch attempt to persuade them to let the EU Commission intervene in its Emissions Trading Scheme to prop up carbon prices that are near record lows.

Thirty firms and organisations, including energy companies Shell, E.On and EdF, wrote to MEPs, ministers and member state officials on Thursday urging them to support the EU Commission’s so-called backloading plan in a key vote on Feb. 19.

“The EU has an opportunity to stimulate our own economy through the development of new, and low carbon, industries while at the same time continuing to show global leadership on climate change issues. However, policy makers must act now to support the ETS,” the letter dated Feb. 14 said.

Separately, the Institutional Investors Group on Climate Change (IIGC), which represents almost 100 investment managers with 7.5 trillion euros under management, has written to the same lawmakers urging them to back the plan.

The plan would allow the EU Commission to postpone the sale of up to 900 million permits to prop up carbon prices trading at around 5 euros.

Stephanie Pfeifer, executive director of the IIGC, said: “The collapse of the carbon price and the direction of EU energy policy are creating uncertainty amongst investors concerned by climate change and weakening the case for investment in Europe’s low-carbon sector.

MEPs will vote on the plan in the European Parliament’s environment committee on Tuesday Feb. 19 before sending to the Council of Ministers and member state officials in the Climate Change Committee for endorsement.

However, lawmakers are split in all three institutions on the proposal, which involves postponing the sale of permits until 2019-2020.

Coal-reliant Poland is trying to block the measure, while lawmakers in the biggest political party in Europe’s parliament, the European People’s Party, are split on the issue.

All three institutions need to approve the plan before it can become law.

Analysts said if the measure passes, carbon prices could surge from current levels of around 5 euros to back to double digits.

Without the plan ,and subsequent structural reform of the scheme to eventually retire the permits, prices will remain depressed under the weight of a surplus of up to 2 billion permits.

“The current carbon price will not stimulate low-carbon investments or innovation,” the letter from the 30 companies said.

By Andrew Allan – andrew.allan@thomsonreuters.com