Finnish experts urge the government not to curb climate action because of energy prices
COGNOSCENTI In Finland, decision-makers’ proposals to curb climate measures to alleviate the rise in energy prices have been rejected. reports YLE.
The Basic Finns, the Coalition and the Social Democrats have all cited energy prices as a basis for changing the EU’s emissions trading mechanism. The prices of emission rights have been unusually high since last fall – currently around 90 euros per ton, about three times more than a couple of years ago.
It is inevitable that some of the increase will trickle down to consumers’ bills.
For example, the social democrats have proposed that the number of emission allowances distributed to the energy sector should be increased in order to lower energy costs for consumers. Basic Finns have suggested that the 27-country bloc temporarily suspend the mechanism.
The Greens and the Left Alliance, members of the five-party alliance led by the Social Democrats, have announced that they do not accept changes to the emissions trading mechanism.
On Tuesday, YLE asked Sitra, the Chamber of Commerce and the Climate Change Panel to comment on the proposals.
Outi HaanperäSitra’s leading expert saw that adjusting the emission trading mechanism would be a bad way to deal with an acute crisis, as there are no guarantees about its effects on high consumer prices, as the production of affordable energy does not satisfy demand. .
“The key question is whether increasing the number of allowances could add capacity to the market,” he told the broadcaster.
Although a fall in the price of emission allowances could theoretically lead to the restart of coal power plants partly due to emissions trading, the resulting increase in fossil energy would likely be limited and would not necessarily reduce market prices.
Markku OllikainenThe chairman of the climate change panel also questioned the merits of intervening in emissions trading.
“There’s no guarantee that anything significant will happen in the market,” he said. “Intervening in emissions trading would not take care of high electricity prices, but would encourage doing something that increases emissions.”
According to estimates, the share of emission rights in consumers’ energy prices is currently less than a fifth Teppo Säkkinen, industrial and climate policy advisor at the Chamber of Commerce. He estimates that emission rights make up an average of 20 euros of the price of a megawatt hour of energy.
“When prices [per megawatt-hour] are hundreds of euros, increasing emission rights has only a small effect on prices, but it causes great damage to the market. Some [rights] bought at a reduced price may also end up in the warehouse waiting for higher prices,” he told YLE.
Since emissions trading is the cornerstone of the EU’s climate policy, Finland alone cannot increase the amount or rights, let alone suspend the system completely. Emissions from industries covered by the system decreased by 43 percent between 2005 and 2020. Its functionality depends crucially on not filling the market with emission rights and lowering the prices of the rights too low.
Säkkinen stated that the functionality of the system is particularly important for Finland. According to him, most of the country’s electricity is already almost emission-free.
“It’s a way to mobilize clean energy investments and lower prices in the long term. Households and businesses are now paying higher prices because of Central Europe’s dependence on fossil fuels,” he said.
“The company’s support has been critical to this system,” Haanperä repeated. “If the outlook is murky or made even bleaker, it could worsen the crisis because companies lack the courage to invest in new technologies.”
He also pointed out that reducing climate action would be counter-intuitive in the current situation.
“You have to remember that this is a fossil energy crisis. Without climate action, we would be in a much worse situation.
The Basic Finns have also expressed their support for restarting the energy use of peat. Although emission-intensive fossil fuel is important from the point of view of security of supply, continuing operations in the longer term is not justified, Ollikainen reasoned.
“No one should have to be frozen out. But are we putting our money into reviving an activity that will eventually have to stop, or something that is sustainable?” he asked.
In its budget session on Wednesday and Thursday, the Finnish government will consider, among other things, ways to support households struggling with high energy prices. The EU has also announced that it is preparing emergency measures to curb the rise in energy prices.
Aleksi Teivainen – HT