Europe’s largest institutional investors called upon EU energy and climate ministers to take urgent action to bolster carbon prices ahead of a crucial meeting in Brussels that took place this week.
In one of the most significant interventions to date, the Institutional Investors Group on Climate Change (IIGCC), a coalition representing around 80 investment firms, sent an open letter to ministers calling on them to reform the ETS and force up the price of carbon.
The IIGCC letter calls for policymakers to take steps to avoid a repeat of the recent slump in carbon prices by developing “pre-agreed adequate review process mechanisms to cope with unforeseen economic circumstances in future”.
The group – which includes Aviva Investors, the BBC Pension Trust, BNP Paribas, Co-operative Asset Management, HSBC Investments, and Scottish Widows Investment Partnership – argued that a combination of the economic downturn, energy efficiency improvements, and the increased supply of carbon offset credits had created an oversupply in the carbon market that meant it was no longer providing a sufficient incentive for firms to switch to cleaner sources of energy.
Ministers are expected to address this over supply of carbon credits, that has resulted in the price of carbon set by the ETS reaching record lows of under €7 a tonne in the meeting.
“With the potential for climate change to have major negative impacts on the economic systems in which they operate and on the assets in which they invest, investors are calling for decisive action,” said Stephanie Pfeifer, executive director of the IIGCC, in a statement.
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