European utilities want carbon price as main climate change tool

PARIS (Reuters) - French power generator Engie and a group of European utilities called on Tuesday for carbon pricing rather than targets for increasing renewable energy use to be the main tool for fighting climate change.

Gerard Mestrallet, Chairman and Chief Executive Officer of GDF Suez, leaves a news conference after announcing the new company name, Engie, in La Defense business district in Courbevoie near Paris, France April 24, 2015. REUTERS/Gonzalo Fuentes

The group, which includes Germany’s E.ON, Italy’s Enel and Spain’s Iberdrola, wants the European Commission to strengthen its emissions trading scheme to boost carbon prices and investment in low-carbon power.

“We call on political leaders to design an appropriate framework to make low-carbon investment happen,” Engie Chief Executive Gerard Mestrallet told reporters.

The group, called the Magritte initiative after the museum of the Belgian surrealist painter in which they first met, owns more than 50 percent of EU power generation capacity and has lobbied against renewable energy targets since its foundation two years ago.

While the Magritte group companies operate more than 81 gigawatts of renewables capacity, their gas-fired plants and nuclear stations have suffered as a flood of subsidized solar and wind has created overcapacity and priced their traditional generation assets out of the market.

The group has called for an end to subsidies for mature renewable energies and wants the EU to boost its carbon emissions scheme, whose low prices have failed to boost low-carbon fuels like natural gas and nuclear.

“We believe that the EU’s Emission Trading System is the tool strong enough to reach the decarbonization target,” Czech Republic utility CEZ chief Daniel Benes said.

Dutch energy specialist Hendrik Steringa, who researches utilities’ business strategies, said the Magritte group’s CO2 drive mainly aims to delay the introduction of more renewables.

“They focus on the carbon emissions trading scheme because they know this will take a very long time,” Steringa said.

Mestrallet said there was a false impression the Magritte group is against renewables, adding: “It was obvious two years ago that the level of subsidies, with a kind of open-bar system in some countries, was not sustainable.”

European Parliament Green Group member Claude Turmes said a carbon market was a poor tool for climate policy.

“Proponents of the carbon market consider this will allow the development of wind and solar on its own, implying that the EU would not need dedicated legislation on renewables for the post-2020 period,” he said.

He added that strong legislations on efficiency and renewables had made the EU the world champion in climate change mitigation, not the failed EU carbon market.

Norway’s $850 billion wealth fund, said on Tuesday it had sold stocks of some utilities this year and that it was in discussions with power generators about using less coal.

“Those companies that have more than 30 percent coal in their energy mix will go out of the portfolio, unless they have a concrete, tangible investment plan to bring coal down below the 30 percent level,” fund CEO Yngve Slyngstad told Reuters at the New York Times Energy for Tomorrow conference.

Germany’s RWE, for whom coal accounted for 60 percent of its 2014 power production, has seen its stock slide 56 percent this year.

Editing by David Holmes and Susan Thomas