Deeper EU energy saving goal would knock CO2 price -analysts

Published 07:31 on July 8, 2015  /  Last updated at 12:56 on July 9, 2015  /  EMEA, EU ETS  /  No Comments

EU carbon prices would take a 4% hit should the EU agree tougher 2030 energy saving goals reported to be under consideration by the European Commission, analysts said on Thursday.

(Recasts with analyst reaction)

EU carbon prices would take a 4% hit should the EU agree tougher 2030 energy saving goals reported to be under consideration by the European Commission, analysts said on Thursday.

“Hiking the 2030 energy efficiency target up to 30% from 27% cuts our price forecast for the average 2021-2030 carbon price by €1 to €23,” said Emil Dimantchev, an analyst at Thomson Reuters Point Carbon.

The European Commission is considering whether to deepen the bloc’s 2030 energy efficiency target after changing the way it calculates costs, ENDS Europe reported, citing unnamed sources.

The move would be bearish for EU carbon prices because the resulting lower energy use would dampen demand for power, in turn curbing demand for carbon allowances from utilities.

Alongside 2030 renewables and CO2 goals, EU leaders agreed to a 27% energy saving goal for 2030 last October, weakening the Commission’s proposal of 30%.

But the EU’s energy and climate commissioner Miguel Arias Canete believes the executive is justified in proposing to raise the goal again because cost estimates will be significantly lower under its new estimates, ENDS said late Tuesday.


Commission officials declined to comment. The executive is not due to propose a revision to the Energy Efficiency Directive until early 2016 but plans to publish a raft of energy and climate proposals on July 15.

Yet, Point Carbon’s Dimantchev pointed out that EU policy on energy efficiency was currently very unclear.

“A lot depends on what kind of measures will be implemented. Improving energy efficiency requires a mix of nudging policies including informational and financial measures, which are always more effective if made mandatory in the respective member states,” he said, adding that MSR reforms will partially shield carbon prices from the effects.

“The MSR will cut in half the negative impact of a higher energy efficiency target on the carbon price,” he said, referring to the MSR adjusting the supply of allowances made available through auctions.


In addition to Arias Canete, the Commission’s vice president for energy union, Maros Sefcovic, has also spoken of his preference for the 30% level in recent months.

Earlier this week, Politico reported, also not naming sources, that the Commission was intending to change its discount rate for calculating the cost of energy efficiency investments to 10-12% from the current 17.5% in next year’s revision of the Energy Efficiency Directive.

ENDS said that an internal Commission document showed that the Commission’s modelling consultant had recommended the move.

By Ben Garside –

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