Davey urges ETS reform ambition

The European Commission needs to go further than it currently proposes in permanently reforming the Emissions Trading Scheme (ETS), the UK’s energy and climate secretary Ed Davey tells the Eurelectric annual convention.

“The EU ETS is often considered the cornerstone of the European climate and energy policy framework. So any new 2030 Energy Framework has to address the weaknesses in the ETS system, tackling the large surplus of allowances depressing the carbon price,” he says.

Davey says Europe cannot repeat the experience of last year’s so-called backloading reforms, whereby 900million carbon emission permits were temporarily removed from the ETS in order to prop up the price of such permits in Europe’s cap-and-trade system.

“In the UK’s view, we have to go further than the reforms proposed by the Commission,” he says. “Having spoken to many of Europe’s energy ministers intensively in recent months, my strong view is that major reform of Europe’s carbon market is now possible.”

The energy secretary says that increasingly people are recognising that climate change policies are not the cause of Europe’s competitiveness problem.

“The recent International Energy Agency report spelt it out: Europe’s energy price problem has been caused by the US’s successful exploitation of shale gas.

“But we will need more than a reformed EU ETS to stimulate growth in home-grown low carbon capacity. The central plank of 2030 should be an EU greenhouse gas target of at least 40%," Davey says.

“We need to make use of everything nature and science has provided us – renewables, nuclear, indigenous gas supplies – and new technologies like hydrogen and carbon capture and storage.

“An ambitious greenhouse gas target is the technology neutral approach that will do this – supporting carbon pricing,” he adds.

Davey says in five months time at the European Council in October, European heads of state have a realistic chance of last bringing together the three key strands of energy policy – carbon, security and price – to forge a coherent strategy for the first time.

“The three overarching issues of energy policy – security of supply, affordability for consumers; and the requirement to decarbonise – have all come into sharp focus over the last few months."

Davey says the UK has supported 6GW of interconnection projects which would represent a 150% increase in the UK’s connected capacity.

Three projects are heading for financial approval over the next 12 months – Eleclink through the Channel Tunnel is due to be operational in 2016,  Nemo to Belgium in 2018, and NSN to Norway – the world’s longest subsea electricity cable due to be operational in 2016.