Enel: No climate deal without global carbon market

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With nearly 200 nations having begun climate talks in Copenhagen, a genuine global regulatory framework is required to create a level playing field for businesses seeking to slash their emissions and move towards a low-carbon future, Giuseppe Montesano, head of environmental policy at Italian power company Enel, told EURACTIV in an interview.

“A global agreement is a pre-requisite for a global carbon market, which is in turn the condition to set a CO2 price, which is what allows companies to create value by lowering their emissions,” said Montesano. 

A failure in Copenhagen, the Enel executive noted, would impact on investments in low-carbon technologies. He also stressed that the conference will not be a failure if key elements are established to make it possible to progressively link regional systems, primarily by using common offsets. 

“The present policy framework, based on the EU ETS [emissions trading scheme; see EURACTIV LinksDossier), has the advantage of letting companies choose the most cost-effective ways to reach the targets within available options. This would not happen, for example, with a carbon tax, which would not be capable of guaranteeing compliance with emission targets,” said Montesano. 

But the Enel executive immediately added that there is no real perspective on what the regulatory framework should look like in the longer term, which is a pre-requisite for triggering massive investment to reduce carbon emissions. 

“What is also not right is that in the shorter term, until a global carbon market is established, policies are dramatically limiting the use of offsets like carbon credits generated by the CDM [Clean Development Mechanism], thus preventing emissions reductions and low-carbon technology transfer to developing and emerging countries,” Montesano added, noting that such conditions would increase compliance costs for companies and ultimately affect consumer prices. 

According to Montesano, establishing a level playing field comes with implementing a genuine global approach, which can be achieved by allowing for more flexibility in reaching targets. 

“Domestic policies should be accompanied by open access to international offsets, like the CDM or a successor mechanism based on sectoral crediting,” he said. 

Regarding the EU’s promised target of 30% cuts in CO2 emissions by 2020 should other developed countries propose comparably ambitious reductions, Montesano stressed that introducing too stringent targets without an adequate offsetting mechanism in the short term might result in solutions that are not optimal both in terms of costs and emission reductions in the long term. 

Montesano argued that as the private sector has delivered approximately 85% of emissions reductions since the Kyoto Protocol’s entry into force, it is therefore a must that “an agreement on an internationally-governed offsetting mechanism in Copenhagen would guarantee continued direct involvement of private entities”. 

Giuseppe Montesano was speaking to Daniela Vincenti-Mitchener.

To read the interview in full, please click here.  

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