As the EU institutions wrap up a climate policy framework for 2030, the CEO of one of Europe’s biggest energy companies has issued a fresh call for a carbon tax for the transport and heating sectors as well as a carbon floor price for the industry and power sectors. What is more, Johannes Teyssen, CEO of German utility Eon, says the European Commission has done all it can to push climate policy – now it’s the turn of the Member States – Germany above all..
Johannes Teyssen, CEO of Eon, believes that the next bout of climate action must come from Member States, not the European Commission. “Europe has done what it could with the EU ETS reform,” he told journalists at a press lunch in Brussels on 25 January. The reform is “quite an achievement” but “to expect more from the European Commission now would be unreasonable”.
EU ETS floor price
MEPs and Member States agreed on a post-2020 reform of the EU ETS last autumn, more than two years after the Commission tabled its original proposals. The EU ETS caps the greenhouse gas emissions of more than 11,000 installations in Europe’s power sector and energy-intensive industries. In this way, it subjects around 45% of European emissions to a market-based cap-and-trade system.
The reform tightens up the rate at which the cap shrinks every year from the current 1.74% to 2.2%. It will also lead to the cancellation of up to three billion “excess” allowances that have been putting downward pressure on the price for years. And crucially, it will ensure that national initiatives (e.g. a coal phase-out) lead to a corresponding number of carbon allowances being cancelled at EU level. On the back of the reform, the EU carbon price is widely expected to reach €20 a tonne in 2020 and €30 a tonne in 2030. Last week, it hit its highest level in six years – over €9 a tonne.
Analysts and campaigners say it needs to climb much higher to trigger clean investments. Teyssen suggests that waiting for the reforms to deliver could take a while. For this reason he told Brussels journalists that a carbon floor price would be “helpful”. ”I think we should target a start price of €25 a tonne,” he said. Teyssen doesn’t favour a separate carbon price for industry and the power sector, as some have suggested.
Carbon levy on everything else
But the Eon CEO had a bigger point to make… (continues on EPW)
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