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EU carbon market extension 'high risk, low reward for consumers'

Highlights

Eur100/mt price needed to change behavior

Policies risk tipping more into fuel poverty

Hydrogen blending expensive, risky

Extending the EU's Emissions Trading System to include road transport and buildings would be a high-risk, low-reward strategy for consumers, the European Consumer Organization BEUC said in a press briefing July 9.

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On July 14 the European Commission is set to publish 2030 climate proposals, including a major revision of the EU ETS to include road transport and buildings from 2025.

For the ETS to deliver meaningful savings in road transport and buildings, "carbon must be set at a very high price to drive behavioral change. It's a high risk, low reward strategy," BEUC's Team Leader, Sustainability, Dimitri Vergne said.

Studies showed that CO2 prices would need to rise to Eur100-Eur150/mt ($118-$178/mt) to force change in habits, making it "socially extremely difficult as this would increase energy and fuel bills to unacceptable levels, at a time when the alternatives - electric cars and home renovation – are simply not available," he said.

Other policies in the EC's climate package, namely tougher targets for CO2 emissions from cars and vans, the renewables directive, the energy efficiency directive and the alternative fuels infrastructure directive, must deliver "systemic, structural changes" driving viable consumer alternatives before carbon pricing could play a role, he said.

34 million fuel poor

Exposing consumers to higher prices while being locked into fossil fuel solutions was most unfair on Europe's 34 million people defined as being energy poor, said BEUC Director General, Monique Goyens.

The risk was that many more on the edge of energy poverty now "would fall into energy poverty" as a result of increased energy costs. "This is exactly what must be avoided," she said.

Another consumer concern was the upfront capital cost risk of converting to lower carbon heat, Vergne said.

BEUC wants to see much clearer planning guidance in the EU's revised renewable energy directive so consumers "won't buy a heat pump or a new gas boiler if they know their neighborhood is to be connected to a district heat network," he said.

Hydrogen blending

It also urged the commission and member states to make cost-efficient technology choices.

"There is much talk of hydrogen blending as a solution for heating. We're very skeptical about this. Asking consumers to heat their homes with hydrogen is asking them to take an expensive bet on an unproven technology," he said.

Direct electrification was cheaper and would bring greater environmental benefit, he said.

"Hydrogen and synthetic fuels must be reserved for those sectors that are very difficult to decarbonize," he said.