Vattenfall CEO sees global "cap and trade" by 2020

PLOEN, Germany (Reuters) - The creation of a global "cap-and-trade" market on greenhouse gas emissions is necessary for long-term environmental management, the head of the company aiming to become Europe's largest producer of offshore wind power said on Friday.

Speaking after a discussion on climate change where European energy leaders agreed that business needs clear international standards to make progress on climate change, Vattenfall Chief Executive Lars Josefsson said he saw momentum toward such a regime building.

"Globally, I see such a system coming into place somewhere between 2015 and 2020," he told Reuters. "Here in Europe we have cap and trade, and we believe that it is the way to long term sustainability," he added.

Europe started a market mechanism in 2005 as the key plank of its climate legislation and the United States is now mulling a similar system which would help a push into clean energy investments.

Policymakers and senior executives told Reuters at a Global Economic Symposium in northern Germany this week that established technologies including natural gas and energy efficiency are top picks to lead a clean energy race through 2020.

But over the longer term breakthroughs are needed in nuclear power, farming, biofuels, and solar and wind energy, they said.

Industry and banks are placing bets on the climate-friendly energy of the future in a contest that may have many winners, business and policy leaders told a Reuters Global Climate and Alternative Energy Summit.

Vattenfall, a Swedish-German utility, is also one of the leading developers of the novel carbon-capture and storage process (CCS) for dealing with harmful carbon dioxide emissions from coal burning in the fight against climate change.

Like other European utilities, it has taken a hit from the global economic downturn, with earnings falling 7 percent annually in the second quarter as demand for power and gas fell across Europe due to a slowdown in manufacturing and energy price fluctuations.

Vattenfall however aims to be well positioned for a future rebound in prices and the establishment of international standards that will favor renewable energy, Josefsson said.

"The fall in prices is negative for wind and environmentally friendly power, but over the long term of course we believe the growth of the world will continue and prices will be picking up again," he said.

Competing priorities on the U.S. political agenda and the global recession have threatened fast movement and decisive action at a major U.N.-led climate meeting in Copenhagen in December to prepare for a successor regime to the Kyoto Climate Protocol.

But the longer fight to avoid dangerous climate change including droughts, floods and rising seas may require technology like CCS, upon which companies like Vattenfall have placed priority.

Through the ongoing takeover of Dutch peer Nuon, Vattenfall aims to increase wind power generation to 15 terawatt hours (TWh) by 2015, a sixfold increase from its 2009 levels.

(Reporting by Brian Rohan; Editing by Andy Bruce)