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Shell threatens to halt European investment if forced to pay to pollute - 10 Apr 2008 - BusinessGreen
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BusinessGreen > News > Legislation
Shell threatens to halt European investment if forced to pay to pollute
French executive claims oil giant will stop investing in Europe if EU makes
good on plans to force heavy polluters to buy emissions credits at auction
James Murray, BusinessGreen, 10 Apr 2008
Lobbying against the EU's plans to tighten its emissions trading scheme (ETS)
stepped up a gear yesterday when a senior executive at oil giant
Royal Dutch Shell told the French Chamber of
Commerce that it would stop investing in Europe if it is forced to buy emission
credits at auction.
In a clear signal to lawmakers in Brussels, Shell France director Christian
Balme said that if the EU presses ahead with plans to auction emissions credits
to heavy polluters such as energy generators, oil firms and cement and steel
manufacturers from 2013 then it would destroy the company's profits in Europe.
Firms currently receive the vast majority of the emissions credits they
require each year for the ETS for free, but under the
proposals
put forward in January, oil refineries and other heavy industries will have
to buy 20 per cent of their emissions credits at auction, rising to 100 per cent
by 2020.
Balme argued that if this happens it will be "impossible" for Shell to turn a
profit in the region. "I am talking about $250m [Ј126m] of profits at the
moment," he said. "If we extrapolate the price of CO2 by the tonne, we arrive at
the same level, which is unacceptable."
He added that the changes would mean there would "be no more investments by
Shell in Europe".
A spokesman for Shell refused to be drawn on whether the company would make
good on its threat and cut investment in the region if it is forced to pay for
carbon credits. However, he confirmed that the company was opposed the proposed
changes to the ETS.
"We are in favour of cap-and-trade schemes, but they should not be used as a
revenue raising opportunity for governments and as such emissions credits should
be allocated for free at the start of each phase," he said, adding that ultimat
ely a global scheme would be needed to ensure a level playing field for
investment between different regions.
While energy generators have been broadly supportive of the proposals for
increased auctioning of emissions credits on the grounds it will impact the
entire energy market across Europe, oil firms and other heavy industries have
been lobbying hard for EU lawmakers to reconsider the proposals, arguing that if
they are forced to pay for credits they will be at a disadvantage to foreign
rivals and may be forced to relocate their facilities.
MEPs have are continuing to investigate ways to ensure that European
competitiveness is not undermined by the plans, and earlier this year French
president Nicolas
Sarkozy
raised the prospect of a carbon tariff being placed on imports that have
benefited from being manufactured in a region where firms do not have to pay to
pollute.
Advocates of auctioning credits maintain that unless heavier polluters are
forced to pay for each tonne of carbon they emit, the financial incentives for
investment in cleaner technologies will remain too small to drive the
transition towards a low carbon economy.
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