Investors Warn Against Diluting EU Emissions Trading System in Key July Review
Investor Concerns and Recommendations for the EU Emissions Trading System
By Simon Jessop
Signatories and Their Message to EU Leaders
LONDON, June 10 (Reuters) - A group of investors managing around €12 trillion ($14 trillion) in assets have backed a public statement calling on European Union leaders not to dilute the bloc's Emissions Trading System during a planned review.
- Forty-six signatories call on EU leaders to support a "robust and predictable" ETS during the July review, calling it "a critical moment for Europe’s competitiveness, energy security and clean industrial future".
- Signatories include Allianz SE, L&G Asset Management, Church of England Pension Board, Erste Asset Management, Sampension and Nordea Asset Management.
Key Points for Maintaining a Strong ETS
Alignment with Climate Goals
Investors flag points to maintain in the ETS including: ensuring the ETS cap aligns with the EU’s climate goals; and that there are transparent rules to maintain supply and scarcity, limit price volatility and help ensure market liquidity.
Carbon Border Adjustment Mechanism
The investors also call for a "functioning carbon border adjustment mechanism" to mitigate carbon leakage risks and drive carbon pricing elsewhere.
Use of ETS Revenues
ETS revenues, meanwhile, should be used to support investment in industrial decarbonisation and energy system transformation, with support offered to companies making "meaningful" decarbonisation investments and targeted sectoral policies to address investment barriers.
European Commission's Position
Extension of Free Emissions Allowances
An internal European Commission document seen by Reuters on Wednesday suggests it will extend industries' free emissions allowances, in exchange for them investing in the bloc.
Investor Perspective on Policy Stability
Importance of Predictable Frameworks
Walter Hatak, head of responsible investments at Erste Asset Management, said: “Institutional investors depend on predictable long-term policy frameworks to allocate capital with confidence. Weakening the EU ETS would increase regulatory uncertainty, dilute the carbon-price signal, and risk penalising companies already investing in electrification, clean industrial processes and low-carbon technologies."
Currency Note
($1 = 0.8658 euros)
(Reporting by Simon Jessop; Editing by David Holmes)
