Linking with Australia’s carbon market may spur the European Union to set up an independent panel to help manage demand and supply in its own program, improving governance, according to Accenture Plc. (ACN)
The structure would need to be independent of nations while including input from governments and national or European agencies, Mauricio Bermudez Neubauer, a London-based lead consultant on carbon markets at Accenture, said July 15 in a phone interview.
“It needs to be something like a central bank,” he said. “If the EU is talking about linking up with Australia, there has to be a degree of harmonization.”
The Australian Climate Change Authority, established a year ago, provides independent advice on the operation of that nation’s carbon price and its emission caps. Discussions to link the European and Australian carbon markets were speeding up, Connie Hedegaard, EU climate commissioner, said yesterday on her Twitter Inc. account. The regulator was exploring whether the two markets may be able to form an interim link in July 2014, a year earlier than previously planned, said Isaac Valero-Ladron, Hedegaard’s spokesman.
The EU is seeking to change the structure of its carbon market after a build up of a surplus equivalent to a year’s supply. Italian Prime Minister Enrico Letta said yesterday the chances of the U.K. leaving the EU are being underestimated by members, who should start planning now for the changes needed to keep the group intact.
“The current political context may not be the best for EU-wide structures,” Bermudez Neubauer said. “But if you want to set this up for future decades, you need to set it up right.”
U.K. committee
The U.K. has the Committee on Climate Change that advises on carbon budgets in that nation. In the EU, the Brussels-based commission proposes carbon-market laws, helps oversee them and publishes emissions data. It also leads the bloc in international climate negotiations.
The EU should consider a central carbon bank, whose role would be to help manage imbalances between supply and demand in the system, Oeystein Loeseth, chief executive officer of Vattenfall AB, Europe’s biggest emitter after RWE AG (RWE), said by telephone July 3.
“That’s one of the solutions that can work,” he said.
EU emission allowances for December declined 2 cents today to 4.12 euros ($5.41) a metric ton on the ICE Futures Europe exchange in London at 10:10 a.m. The contract was at a record 34.91 euros a ton in June 2008.
Carbon prices need to rise beyond 20 euros a ton to help shift power output away from coal and toward natural gas and non-fossil fuels, Loeseth said. The central carbon bank could help manage the transition and balance the need to keep emissions falling on the one hand and costs down on the other, he said. “That’s the most economical way for society. You will avoid taking the most costly energy sources first,” he said.
