EU carbon trading revamp to boost revenue return to industry, commissioner says

By Sergio Goncalves

LISBON, May 12 (Reuters) – The European Commission’s revamp of the bloc’s carbon emissions trading system aims to ensure more revenue is returned to industry as an incentive ​for it to decarbonise further, EU climate commissioner Wopke Hoekstra ‌said on Tuesday.

Speaking in Lisbon, he also said Europe must produce more of its own energy, particularly renewable energy, but still needs nuclear power as well.

Launched in 2005, the EU’s emissions trading system is its main tool to cut ‌CO2 ​emissions, requiring thousands of power plants and ⁠factories to buy permits.

“We ⁠see opportunities to improve it, including ensuring more of the revenue generated is returned to industry to support further decarbonisation, but we’ll stay the course and continue to reap the benefits,” Hoekstra ​said at a press conference.

Some governments and industry groups have warned the scheme risks hurting Europe’s competitiveness, particularly in the face ⁠of rising energy prices.

Hoekstra said the system “has ⁠worked phenomenally well” and is backed by a ​number of governments, including Portugal’s, as well as hundreds of companies.

He said ​the crisis in the Middle East had exposed that Europe ‌is “hugely vulnerable” due to its reliance on external energy and called for action on what he said was an issue “of national and European security.”

“That means more solar, more wind, more geothermal, more heat ⁠pumps, more interconnectors, more grid investments, and for those who like it, more nuclear investments,” Hoekstra said.

He also said he understood popular frustration with ⁠what he called the “outrageous ‌profits” some energy companies were reaping due to ⁠the market volatility caused by the Iran war.

Portugal, ​along ‌with Germany, Italy, Spain and Austria, sent a ​letter to the ⁠European Commission last month, calling for a windfall tax at a European level on energy companies’ profits. Brussels, however, left the matter up to individual countries.

Portugal’s government will seek parliament’s approval for such a tax in the coming weeks.

(Reporting by Sergio Goncalves; Editing by Victoria Waldersee ​and Joe Bavier)