I thought carbon cuts and squestering was to save the planet? Raising emission minimum from 20% to 30% just to stimulate carbon trading? So this isn't about saving the planet?

Sep 30, 2010
The European Union’s carbon trading system hasn’t provided the needed long-term price signal for investors to switch away from carbon-intensive technologies, the Institutional Investors Group on Climate Change (external - login to view) said.

A survey of more than 40 investors including property, carbon, infrastructure and pension funds found that fewer than 10 percent of respondents said the EU Emissions Trading System had provided a strong enough price incentive to change from more polluting technologies and none said the EU-ETS had provided long-term price certainty, the group said today.

The group, with 60 members managing about 5 trillion euros ($6 trillion) of assets, said the EU should decide quickly whether the 27-nation bloc will raise its emissions target for 2020 to a 30 percent cut from 1990 levels from 20 percent. It also called for long-term plans for emissions trading and more durable support for renewable energy in member states.

The bloc should “provide clarity on the EU-ETS out to 2030 in order to be consistent with the investment cycles of large renewable energy and energy infrastructure assets,” the group said in an e-mailed statement. “The EU ETS will only support a shift into low-carbon investment if it provides investors with strong price signals over a significant period of time.”

The EU has said it’s on course to meet its 20 percent target and that the bloc is ready to move to 30 percent should other countries follow. European Climate Commissioner Connie Hedegaard (external - login to view) this month said there aren’t enough comparable international efforts for the EU to agree to a stricter goal.

Today’s survey also showed that 90 percent of asset managers are deterred from making investments in renewable energy by retrospective policy changes and the absence of grandfathering guarantees in some member states. Grandfathering is where new rules aren’t applied to old projects.
Dampening Confidence

While the group didn’t name specific policies in member states as a concern, countries including Spain and France have made or are planning changes to existing subsidies for solar power, having previously said those incentives would be in place for longer.
“Actual or threatened retroactive changes affect the business case for existing investments and severely dampen investor confidence in making future investments,” Ole Beier Soerensen, chairman of the investor group, said in an e-mailed reply to questions. Also, “administrative barriers relating from national planning regimes should be removed,” he said.

Higher carbon prices are also needed to drive innovations, the commission’s Hedegaard said on Sept. 3.
Carbon allowances in the EU’s emissions-trading system have lost almost 40 percent from their 2008 levels as the global financial crisis hampered growth and reduced industrial output. Permits for December 2010 traded at 15.40 euros ($21.02) a metric ton today compared with 24.05 euros two years ago.
EU Debate

The EU carbon-trading program covers more than 12,000 facilities that produce energy or goods ranging from paper to cement. Polluters must have an allowance for each ton of carbon dioxide they let off. Those producing more than their allowance have to buy more; those that emit less can sell their surplus.
The EU has said it wants to make the ETS, started in 2005, the cornerstone of a global carbon market and eyes linking it with other systems by 2015.

Member states remain at odds on whether the bloc should change its emissions target. While Danish Prime Minister Lars Loekke Rasmussen (external - login to view) said yesterday he would propose at the next summit of the EU heads of state that the bloc should unilaterally deepen its goal, Polish Environment Minister Andrzej Kraszewski (external - login to view) said earlier this month such a move would be “counterproductive.”
Companies that took part in today’s survey include APG Asset Management, Henderson Global Investors, HgCapital and F&C Asset Management Plc.