Vattenfall wants to adjust EU ETS

In collaboration with Fortum and Statkraft, Swedish firm Vattenfall has issued a proposal aiming to tackle deficiencies in the EU's emission trading system.

BY VIKTOR BRANDT KÆRGAARD

Published: 28.06.17 at 11:14

Emissions Trading Scheme (ETS)

The EU's ETS includes more than 11,000 power plants and energy-intensive industries, for example steel, and cement factories. It covers approximately 45 percent of emissions in EU countries.
The scheme is intended to further EU's green transition with the help of market forces. The idea is to reduce CO2 emissions where they are cheapest.
Companies receive a certain number of CO2 allowances and must buy the rest via tender. Those players who save energy will have excess quotas and can sell them on.
For the scheme to work, there must be fewer quotas distributed annually, so that the CO2 price remains high.
However the scheme is faltering because EU countries have issued too many allowances to their own industries, while the financial crisis has caused the CO2 price to shrink.
There are currently approximately two billion excess quotas, squeezing the price to the bottom.
In order to avoid the collapse of the system, in 2013 the EU Commission launched a rescue effort. 900 million quotas were removed from the market until 2019.
However the quota price remains low - at EUR 5 - 6 against the expected EUR 20 - 40 per ton.
For the non-quota areas: buildings, agriculture and transport, the EU has introduced specific CO2 targets for member countries.

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Vattenfall wants to adjust EU ETS

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