Germany VCI chief speaks out against intervening in EU’s ETS system

15 February 2013 17:40  [Source: ICIS news]

LONDON (ICIS)--The president of Germany’s chemical producers trade group VCI warned on Friday against intervening in the EU’s Emissions Trading System (ETS).

Prices for carbon dioxide (CO2) certificates on the ETS are trading at record lows, prompting calls that Brussels intervene in the market to raise prices by reducing the number of certificates.

However, VCI president Karl-Ludwig Kley said that the ETS market system is working exactly as it should, and that the low prices are the best evidence for that.

In an article he contributed to German business daily Handelsblatt, Kley said that the low prices were not a failure of the ETS system at all. Kley put forward four underlying reasons to explain the low prices.

First, in 2009 Europe suffered a severe economic crisis that brought on drastic declines in production, and the effects of that crisis can still be felt today, he said. Second, the share of renewables in the energy mix has grown, especially in Germany.

Third, industry is investing in environmentally-efficient equipment and plants. Germany’s chemical industry alone was putting some €6.4bn/year into those investments, Kley said. And, fourth, companies are investing in emissions credits under the Kyoto Protocol.

“There is no justification at all for political intervention,” Kley said.

“On the contrary: The current price level is the best evidence that climate change targets can be achieved with market instruments, and without harming the competitiveness of our industry,” he said.

“And this proves that environmental protection does not always have to be expensive to work well,” he said.

“The cost is significantly lower than originally estimated. So we should all be happy,” he added.

Instead of putting forward proposals to “set aside” or “back load” CO2 certificates, Kley said that officials in Brussels should rather “lean back and think again” as the European emissions trading market was working out well.

The EU launched the ETS in 2005 as part of its policy to combat climate change and reduce industrial greenhouse gas emissions cost-effectively.

The ETS covers more than 11,000 power stations and industrial plants in 31 countries, as well as airlines. It is now in its third phase, running from 2013 to 2020.

By: Stefan Baumgarten
+1 713 525 2653

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