EU ETS surplus must be cut, says firms

Energy companies are calling on the European Commission to withdraw at least 1.4 billion allowances from the EU emissions trading (ETS) scheme to prevent its failure

In a letter to the commission, Shell, E.ON and others argue that the huge surplus of ETS allowances is pushing the costs of carbon down and failing to provide sufficient incentive to implement energy-efficiency measures or invest in low-carbon technologies.

In its annual assessment of the ETS, think-tank Sandbag concluded that with EU growth well below expectations, participants need 2.2 billion fewer allowances than have been allocated.

It claims that most of the surplus credits are spread between just 10 steel and cement companies, which have already made €1.8 billion from selling spare allowances.

Chris Davies, MEP and regular contributor to the environmentalist, said: “The commission needs to up its game ... We need a vision for the future, and we need the commission to drive it forward.”