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Nordic energy CEOs call for swift revision of the EU 2030 climate and energy legislation

22 Jan, 2021

Today, the CEOs of the three largest Nordic energy utilities, Statkraft, Fortum and Vattenfall, have sent a letter to the Director-General for Climate Action at the European Commission, calling for a for swift revision of the EU 2030 climate and energy legislation.

In their letter, the three CEOs welcome the EU’s revised 2030 climate target of at least -55% as a crucial step on the path towards 2050 climate neutrality, emphasizing three key elements for a swift adjustment of the 2030 climate and energy policy framework.

Here is an excerpt of the letter:

Strengthening and enlarging the EU ETS as a key driver for decarbonisation

The Nordic utilities fully agree with the Commission's commitment to the EU ETS as the core climate policy instrument. In our view, carbon pricing should be applied as broadly as possible in the economy, possibly supported by other instruments particularly in the non-ETS sectors. We propose a two-step approach for the Commission’s upcoming legislative proposal for the revised EU ETS directive:

First, focusing on a swift revision of the current EU ETS is imperative. It is important to align the Linear Reduction Factor (LRF) with the new EU 2030 climate target from 2023 and secure a strong Market Stability Reserve (MSR) that can tackle unforeseen imbalances and policy overlaps also beyond 2023.

Second, introducing carbon pricing in other sectors like maritime, heating of buildings and transport, possibly through separate transitional ETS with a plan for future integration under the current EU ETS cap, is essential.

Enhancing electrification to decarbonise the EU economy

Direct and indirect electrification is not only the most cost-efficient solution and main instrument for decarbonising other sectors, but also contributes to realizing energy efficiency gains and sector integration. We believe clean hydrogen should complement the use of carbon free electricity specifically in hard-to abate industrial and transport sectors.

Substituting fossil fuels with electricity will lead to significant increases in demand for electricity and clean gases. Thus, enhancing electrification to decarbonise the EU economy is crucial, and we remain fully committed to satisfy this demand with our already large and growing carbon-free asset basis.

Strengthening cost efficiency and markets through technology neutrality

The complementarity of technologies plays a key role in keeping transition costs down and making the energy transition affordable to customers. In this respect, we suggest to safeguard the technology neutrality principle in the Taxonomy Regulation by ensuring that the screening criteria are defined objectively and applied evenly in order to enable a full utilization of existing and new carbon-free power production assets to cost-efficiently deliver on the EU climate neutrality objective.

We suggest promoting well-functioning power markets and allow support for less-mature technologies in a transitional phase, such as Carbon Contracts for Difference to cover the cost gap between conventional and low-carbon technologies and avoid market distortions stemming from such support. It is also key to maintain the unbundling principle for ownership and operation of storage and supply of required flexibility.

We also urge the EU to stimulate the demand for carbon free energy carriers in order to speed up investments in generation assets and infrastructure. In this regard it is vital to strengthen the grids and interconnectors across EU regions to enable the full potential of carbon free electricity and clean hydrogen.

Markus Rauramo, President and CEO of Fortum, Christian Rynning- Tønnesen, President and CEO of Statkraft and Anna Borg, President and CEO of Vattenfall