RPT-EU utilities say industries should share C02 cost
Last Updated : 7/28/2008 5:01:07 AM
Source : Reuters UK

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European Union plans to make power generators pay for all their carbondioxde emissions mean higher prices for consumers and would be more palatable if other industries faced similar cost increases, the new president of utilities association Eurelectric said on Monday. Under European Union plans to cut carbon dioxide (CO2) emissions by 20 percent by 2020, power generators will have to buy permits at auction from 2013, while other big emitters of the main gas responsible for climate change will still get some of theirs for free. Incoming president Lars Josefsson said European utilities would be happier about buying all the permits to cover their emissions if other industries across the world had to do the same. "Eurelectric is not against full-auctioning," he said at a conference in Barcelona. "There needs to be auctioning for everybody, not just our industry." Until now most permits were given away and power generators passed on the cost to consumers regardless and pocketed the huge windfall profits. Josefsson, who is also chief executive of Swedish state-owned utility Vattenfall [VATN.UL], said that utilities were not against full auctioning of emissions rights but warned it would mean higher prices and plant closures. "As an industry, we can say this is the right way to go, but watch out for the short-term effects," he said. Josefsson said he hoped that the ground would be laid for more wide-ranging auctions at a conference aimed at extending the Kyoto Protocol to be held in Copenhagen in December 2009. The EU is hoping to lead the global fight against climate change with unilateral emissions targets, while trying not to harm a fragile economy by raising energy costs for industries facing rising competition from China, India and the United States. Airlines and oil refineries face a phased introduction of permit auctioning, starting at 20 percent in 2013 and rising to 100 percent in 2020. Aluminium, steel and cement makers would initially get their quota of permits for free and auctioning would be phased in. Outgoing Eurelectric president Rafael Miranda, who is chief executive of Spanish utility Endesa (ELE.MC: Quote, Profile, Research), also called for auctioning to be applied to other industries. He estimated European utilities would need to spend 2 trillion euros ($3,072 billion) by 2030 to upgrade power plants and distribution networks. "Equal treatment for all sectors must be ensured and efforts made to correct anomalies -- like regulated electricity prices -- so that markets may advance in technological development," Miranda said.