A Critical Conversation on Climate Change ... - Green Choices

lessons unlearned 93and 290–545 for gas, depending on the technology used.) 94 Last yearthe carbon price added about GBP 3.50 per megawatt-hour to wholesaleelectricity prices in the UK. To halt this gravy train for pollutingpower companies, their allocations of allowances would have to becut by two-thirds, IPA concludes. 95At present, the EU ETS is unlikely to do anything for the climateother than affect the timing of the transition to more gas generationcapacity. (Gas-fired power is less carbon-intensive than coal, althoughstill a ‘sunset’ industry, since it too will have to be phased outsoon.) By 2015, IPA suggests, ‘the UK’s electricity system will lookremarkably similar regardless of assumptions on how the EU ETSplays out’. 96In fact, the EU ETS is rendering even the switch to gas doubtful. Uncertaintyabout how many allowances will be available in the future– resulting, again, from EU governments’ policy of leaving decisionson allocations largely to a process of corporate rent-seeking – combinedwith current high gas prices, is causing utilities to delay investmentin gas rather than coal. And if the government doesn’t give outeven more free rights to the global carbon dump to new entrants inthe industry, then investment in new plant will be further deferred,raising emissions even more.All in all, the EU ETS is likely to have helped delay reductions inannual UK power sector emissions to anything below 120 milliontonnes of carbon dioxide for 15 years, just as the RECLAIM and leadtrading schemes slowed pollution control in the US.It may be slowing action on climate change in other sectors as well.In all member states except The Netherlands, governments withdrawcompanies’ pollution permits if they close dirty plants. This createsan incentive to keep such installations open. Yet continuing to grantsuch companies pollution rights after they close such plants wouldhardly make their competitors happy. 97 The large cement firm Holcimcomplains that large emitters are not being given incentives toinvest in more efficient installations. 98 Dutch nitric acid plant operatorshave meanwhile made it known that they want to delay makingcuts in their nitrous oxide emissions in order to be in a better positionto gain from the EU ETS from 2008. 99The practical outcome of the EU ETS is so clearly the opposite ofwhat was advertised that even financial analysts state baldly that the‘competitive advantages’ bestowed by handouts of assets under theEU Emissions Trading System simply ‘cannot be justified from a climatepolicy point of view.’ 100 As Citigroup Smith Barney and otheranalysts predicted as early as 2003, 101 governments are beginning to