Reform emissions trading

The EU’s emissions trading system (ETS) plays a key role in reducing carbon emissions in Europe. However, it does not work particularly well. Vattenfall’s CEO, Magnus Hall, and his colleagues from Fortum and Statkraft are consequently presenting three proposals aiming to strengthen the system.

In opinion piece in business daily Dagens Industri on 20 May, Magnus Hall, Pekka Lundmark, CEO of Fortum, and Christian Rynning-Tønnesen, CEO of Statkraft, state that the EU’s ETS is not working as intended. 

They write: "An important reason for this is the structural surplus of emissions allowances that has unbalanced the entire system. When overlapping national policy instruments are introduced, demand for emissions allowances drops, and this contributes to a higher surplus on the market. If what’s on offer is not adjusted accordingly, the consequence is a lower carbon dioxide price."

To strengthen the system, the CEOs of the three utilities present three proposals: to raise targets by reducing the emissions cap more quickly, to ensure a better interplay between national policies and the EU’s ETS and to avoid new imbalances that can undermine the carbon dioxide price.

Hall, Lundmark and Rynning-Tønnesen write: "In order to succeed in the climate transition, we need a European policy that is coordinated over the long term with clear targets designed to reduce emissions and offers the associated incentives to implement the required changes. We are confident that these specific proposals for a better, more efficient and ambitious system of emissions trading can help to achieve this end."

Dagens Industri (in Swedish)

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