Investors urge EU leaders not to dilute emissions trading rules

A group of investors managing around €12 trillion ($14 trillion) in assets have backed a public statement calling ​on European Union leaders not to dilute the bloc's ‌Emissions Trading System during a planned review.

Forty-six signatories call on EU leaders to support a "robust and predictable" ETS during the July review, calling ​it "a critical moment for Europe’s competitiveness, energy security and ​clean industrial future".

Signatories include Allianz SE, L&G Asset Management, ⁠Church of England Pension Board, Erste Asset Management, Sampension and ​Nordea Asset Management.

Investors flag points to maintain in the ETS ​including: ensuring the ETS cap aligns with the EU’s climate goals; and that there are transparent rules to maintain supply and scarcity, limit price ​volatility and help ensure market liquidity.

The investors also call for ​a "functioning carbon border adjustment mechanism" to mitigate carbon leakage risks and drive carbon ‌pricing ⁠elsewhere.

ETS revenues, meanwhile, should be used to support investment in industrial decarbonisation and energy system transformation, with support offered to companies making "meaningful" decarbonisation investments and targeted sectoral policies to address investment ​barriers.

An internal European ​Commission document ⁠seen by Reuters on Wednesday suggests it will extend industries' free emissions allowances, in exchange for ​them investing in the bloc.

Walter Hatak, head of ​responsible ⁠investments at Erste Asset Management, said: “Institutional investors depend on predictable long-term policy frameworks to allocate capital with confidence.

Weakening the EU ⁠ETS would ​increase regulatory uncertainty, dilute the carbon-price ​signal, and risk penalising companies already investing in electrification, clean industrial processes and ​low-carbon technologies."

-Reuters