European investors frustrated at EU delay on GHG reduction targets/EU ETS reform

Major policy decisions pushed back to October after European Council meeting.

European sustainable investors have reacted strongly to what they say is a disappointing decision by the European Council to delay agreement until October on EU climate policies including a commitment to reduce greenhouse gas emissions (GHG) by 40% below the 1990 level by 2030. The European Council, which consists of the heads of state or government of the Member States, is the major policy arbiter for proposals by the European Commission. At its latest meeting at the end of last week, the Council had been expected to take decisions on the 40% reduction limit as well as reform of the crippled EU Emissions Trading System (ETS) and the setting of a renewable energy target of at least 27% of the EU’s energy consumption by 2030. Those decisions have now been put off until October at the earliest, which sustainable investors said would frustrate attempts to encourage institutional investment into green energy. Stephanie Pfeifer, chief executive of the Institutional Investors Group on Climate Change (IIGCC), which represents 88 of Europe’s largest investors worth €7.5 trillion, said: “Investors cannot plan complex, long-term investments on the basis of proposals alone. They need policies in place. New energy investment is crucial to securing Europe’s energy security and measures that deliver this investment should be a priority for EU policymakers. Investors will need to see a real sense of urgency and an ambitious climate agreement in the coming months if they are to bereassured that the EU is committed to a low-carbon future.” Martin Schoenberg, head of policy at Climate Change Capital, said: “EU Heads of State and Government should reach a final decision on a 2030 package in June – not October. To investors, this will send a renewed signal of high-level political commitment. It will unlock additional investment that can speed up Europe’s recovery and upgrade aging infrastructure. The reform of the Emissions Trading Scheme needs to be accelerated urgently, making an impact on the market in 2017. A few products within some companies’ portfolios should not hold back the transformation of the whole European economy. Investors are ready to help fund this transformation if a clear and stable framework is put in place.” The IIGCC said the EU policy delay would also make it more difficult for Europe to play a leadership role at the UN global climate summit in September. The investor group supports a 40% GHG target as a minimum by 2030 and backs a more ambitious target once a global climate deal has been agreed. The group has also been lobbying the EU to agree Commission proposals for ETS reform, including the establishment of a market stability reserve at the beginning of the next ETS trading period in 2021. The reserve would address the surplus of emission allowances that has built up in recent years and automatically adjust the supply of allowances to be auctioned.