Responsible Investment

The dilemma of the EU carbon market: can policy-makers fix what is broken?

May 7, 2012
Image courtesy by IETA
http://www.youtube.com/watch?v=SjEfFfObo6M

The IETAcomprises both industrial and financial members, ranging from banks to heavy industry; plus the power companies, adding to the dilemma of policy-making, says Simone Ruiz.

“On the one hand we have strong support from the financial sector for the set-aside, becausethey consider the carbon price to be very low at the moment — too low to incentivize investments,” she says.

The industrial sector, on the other hand, says “if you want to do anything, revise the cap, as opposed to … taking away allowances that would have to be put back into the market at a certain point.”

Power sector companies urgently need a higher carbon price and are getting more aggressive about it, she says, noting the recent (and ironic) declaration of Johannes Teyssen, CEO of EON, that “the Emissions Trading System (ETS)is bust, it’s dead…does the price give any signal for new investments? No. None.”

“As a power sector company, you use the carbon price as an indicator: it is part of your investment decision,” says Ms. Ruiz, adding that what power companies care about is “a certain predictable investment environment, so some companies were very strongly opposed to this option of a set-aside, because it is viewed as a policy intervention…they would rather see a revision of the cap of the trajectory, to give them an investment signal today.”

References

This video interview was recorded in Amsterdam on March 6, 2012 during the Argus European Emissions Markets 2012 organized by Argus Media.

This article may be reproduced according to our terms of use with attribution (and link, if online) to www.tias.edu. To be cited as: “The dilemma of the EU carbon market: can policy-makers fix what is broken?”, Simone Ruiz, www.tias.edu, May 7, 2012.

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Audio transcript (mp3)
Low-res video (mp4)
Tweets from Simone Ruiz
International Emissions Trading Association

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