The coalition of progressive European energy companies – including SSE and Denmark’s DONG Energy – have written to MEPs calling on them to vote for the proposals on Tuesday 16 April.
They claim that “an unforeseen surplus of allowances” has pushed the carbon price down as low as €4/tonne, which, coupled with uncertainty on the future of the EU ETS, “hamper investments in low carbon technologies”.
They add that accepting the proposals is the “first step” in restoring confidence in the system, but that it should be followed by longer-term reform.
The proposals would see 900 million carbon allowances in the EU emissions trading scheme (EU ETS) – scheduled to enter the market between 2013-15 – withheld until 2018-20 with the aim of temporarily creating a scarcity of allowance and increasing prices.
Energy secretary Ed Davey has also urged MEPs to vote in favour of the backloading plans, warning the current low carbon price “risks damaging growth and investment in green technologies”.
Davey added that longer term changes to the EU ETS are needed to prevent a “complex patchwork of climate legislation” developing across the EU, which would “increase regulatory burdens on industry”.
Bas Batelaan, head of European affairs at SSE, said backloading will provide “immediate support” to the EU ETS, but added this should be followed by “more structural, longer term remedies to restore confidence among low-carbon investors.”
Labour peer, Baroness Worthington, said the proposal on its own is “insufficient” but it is a “necessary first step” and there are “no sensible reasons” for MEPs to oppose the proposals.