Activity Report 2012 - Eurelectric

ETS
During 2011-12 the structural problems of policy
coherence and uncertainty about targets beyond 2020
helped to cause the ETS carbon price to fall below 10
euros. First the European Parliament, and then the
Commission, declared a crisis of “imbalance of supply
and demand.”
EURELECTRIC has been deeply concerned by this because
of the impact on the 2030 policies debate, where the
perception that the ETS is weak adds to the risk that
other, less market-friendly policies will be preferred.
The Commission has put forward two proposed solutions
for strengthening the ETS to survive the current crisis.
(1) A temporary re-profiling (“back-loading”) of auction
timing in phase 3 up to 2020. (2) A structural reduction
in the ETS cap. The back-loading proposals were
published in July. A discussion paper with options for
structural measures was published in mid-november,
but implementation of any of these will require a lengthy
legislative process. The structural options include a
40 eurelectric activity report 2012
In May, EURELECTRIC published the fifth edition
of its Environment and Sustainable Development
Report. In the tradition of its previous editions,
the report covers the three pillars of sustainability:
environmental protection, economic development
and contribution to the well-being of workers and
society. The report is presented in the context
of the external events (financial crisis and
the Fukushima Daiichi accident) and ambitious
energy, climate and environment policies (2020
targets, REACH regulation, sustainable water
management and resource efficiency) that are
shaping the future of the electricity industry. Key
indicators illustrate the continuing decoupling
between electricity generation and electricityrelated
emissions (CO 2 , SO 2 and nO x ) and the takeoff
of renewable energy sources, in particular
variable ones, which are transforming Europe’s
energy system. The report also features a special
chapter on biodiversity, showcasing the power
sector’s efforts to prevent and mitigate impacts
on biodiversity and natural landscapes.
one-off “retirement” (set-aside) of EUAs in phase 3,
a tightening of the annual linear reduction factor in
the ETS cap either in phase 3 or after 2020 in phase 4,
or the inclusion of other sectors into the ETS – also
probably after 2020. The Commission is also considering
a price floor and the role of international offset credits.
In this fast-changing situation, EURELECTRIC has given
conditional support to the Commission’s proposed
back-loading in order that the ETS can remain a credible
instrument during trading period 3 to 2020. At the same
time, we have made clear that our primary interest is
to assess the structural cap reduction measures in
the context of an economy-wide 2030 greenhouse gas
target decision.
Crucially, EURELECTRIC has called for the Commission
to steer a single, coherent and finite process of EU
decisions which links together agreement on a 2030
target, on the ETS phases 3 and 4, the future of
renewables and energy efficiency beyond 2020, and
the internal energy market.
Fifth Environment and Sustainable Development Report