You have written on a number of occasions in recent weeks about climate change, especially the price of emission allowances and the proposal to set-aside allowances that the European Parliament voted for in order to raise the price (“MEPs to call for ETS set aside”, 23-29 February, and “Tricky talks ahead on binding energy targets”, 1-7 March). 

The Confederation of Swedish Enterprise is convinced that there is a need to apply complementary policies based on the ‘carrot’, as opposed to the ‘stick’, in order to take into account the global nature of the problem and the need to preserve the competitiveness of European companies.

In recent months, the price of carbon has been lower than was previously forecast. But is this really surprising? The price reflects an economic downturn with less industrial production. At the same time, there is no reason to believe that the actual target, a 20% reduction for the overall economy, will not be met.

However, the EU’s emissions trading system also has indirect effects on the economy. In the Nordic market, studies show that each €1 carbon allowance adds €0.08 to a kilowatt hour of electricity. For energy-intensive
industries competing on a global market, this is concerning.

Rather than solely increasing the price of carbon within the EU, the European Parliament, the Council of Ministers and the European Commission should explore ‘carrot-based policies’ that increase the competitiveness of European companies.

Such examples could be financial incentives for research, development and innovation involving academia and tax rebates for demonstration projects.
 
Maria Sunér Fleming

Director, energy and climate policy, Confederation of Swedish Enterprise

Daniel Wennick

Deputy director, EU affairs, Confederation of Swedish Enterprise

Brussels