Bellona nuclear digest. March 2024
A survey of events in the field of nuclear and radiation safety relating to Russia and Ukraine.
News
Publish date: November 13, 2012
News
A Commission draft report on the EU ETS scheme presents options ranging from creating strong price signals to investors and thereby preserving the market-based character of the ETS to setting up price management mechanisms in order to correct the price and beef up the system.
Delaying auctions – first step on the way to more renewable and clean coal investment?
It’s important to underline that the back-loading will not affect the overall volume of allowances to be auctioned in the 3rdphase only the distribution of auction volumes over the period from 2013-2020. While delaying auctions is a good first move a more permanent solution must be decided upon in order to re-establish a strong price signal and consequently encourage investment decisions in the power sector both for clean coal and innovative renewable technologies. The Energy Roadmap 2050 foresees substantial rises in renewable energy and Commissioner Oettinger announced a serious discussion within the Commission on binding renewable energy targets for 2030 to start by the end of this year already. Current low CO2 prices do not encourage investment decisions neither in innovative renewable technologies nor in the CCS technology, which is essential if gas is to have a role as a transitional fuel in short term. Therefore, Bellona will strongly support new binding goals on renewable energy and on cutting carbon emissions through permanent removal of allowances.
Adjustments to the volumes of allowances to be auctioned in 2013-2020
In July the Commission floated three options to correct the ETS price, which was projected to cost well above € 20 at this point; delaying the auctioning of 400 million, 900 million or 1.2 billion credits. A precise figure was however not attached to the first draft of the amendment to the Auctioning Regulation to the Climate Change Committee. The figure of 900 million allowances has been proposed in the light of views expressed by Member States and stakeholders during the public consultation – the process which was closed on 16 October.
The Commission also proposed a minor amendment to the ETS Directive that aims to clarify that the timing of auctions within a trading period may be changed by amending the Auctioning Regulation ‘’in order to ensure the orderly functioning of the carbon market” (COM(2012) 416).The amendment may be seen as controversial because it gives the Commission the power to intervene in the carbon market with the approval of a working group of Member States’ representatives, but only with limited right of scrutiny by the Parliament and the Council.
Positive impact of higher carbon prices on investment decisions – short and long term
The risk is that if the revenue from the NER300 remains low, a lot of low carbon investment will not come to the market, or will need greater support by governments when at the same time the government revenue from auctioning will also be lower than initially expected.
The draft Decision still requires approval by the European Parliament and Council, but the good news is that Connie Hedegaard confirmed yesterday at the extraordinary meeting in the ENVI Committee of the Parliament that the Commission will go ahead with the examination of the back-loading amendment anyway, while noting that the Commission will wait for the final adoption till the approval of the decision amending the ETS directive by the Parliament and the Council.
“We hope that the back-loading proposal will be adopted by the end of the year in spite of the Parliament attempts to delay the whole process. Failure to act before the end of 2012 will keep the investments on hold”, continues Frisvold.
Similarly, Bellona expects strong measures to be proposed on Wednesday in the Carbon Market report. The report will present a set of options for long – term structural measures; according to a draft (leaked in press), the Carbon Market report will suggest six possible options:
1) permanent removal of the ‘back-loaded’ credits (up. to 2.2 bln);
2) a higher 30% emissions reduction target for 2020;
3) limited use of international Kyoto Protocol credits in the ETS;
4) tighter annual ETS caps;
5) expanding the ETS to new sectors;
6) setting up price management mechanisms.
Bellona supports the options 1-5 since they will result in strong price signal for investors and will preserve the market-based character of the ETS. The last option however is more of a market intervention since it could involve setting up a reserve where allowances can be temporarily stored when there is a decrease in demand; or setting a carbon floor price a measure already introduces unilaterally by the UK, which serves as an example of a risk of nationalization of climate polices resulting from lack of EU action.
The price management option is not advisable since it will have an impact on the credibility of the system and the legal certainty for investors – the stakeholders representing the energy intensive industries already (chemicals, steel, metals, glass, paper and petroleum industry associations) argue less about the numbers than about the decision to intervene as such which “will result in higher costs, destabilize the ETS market and have a negative impact on legal security for investors”, concludes Frisvold.
A survey of events in the field of nuclear and radiation safety relating to Russia and Ukraine.
Russian president Vladimir Putin has told the United Nations atomic energy watchdog that Russia plans to restart Ukraine’s embattled Zaporizhzhia nuclear plant, currently occupied by Russian troops and technicians, fueling worries about a serious nuclear accident on the front lines of a grinding military conflict.
Wednesday, April 10, 2024 | Brussels, Belgium – Today, the European Parliament approved the newly revised Construction Products regulation (CPR)...
Recent attacks on Ukraine’s Zaporizhzhia nuclear power plant "mark the beginning of a new and gravely dangerous front of the war," the UN atomic agency's director general said last week.