Europe – Gearing up for ETS

More and more major corporations are incorporating climate change issues into their business decisions in the run-up to the EU Emissions Trading Scheme (ETS), revealed a major industry survey of the Financial Times 500 Global Index by the Carbon Disclosure Project (CDP).

In “high impact” sectors such as mining, power generation and the cement industry, 65 per cent of companies that took part in the survey are now measuring and reporting greenhouse gas emissions – up from 51 per cent last year. For many of these companies the future cost of carbon is a “major headache” with two-thirds of EU utilities expecting wholesale electricity prices to rise by up to 20 per cent. For the cement, lime and glass industries this would translate in a US$312m premium. Energy price rises would also impact on shareholders – a five per cent increase in energy costs would lead to a 10 per cent share price reduction in the mining and metals sectors, according to the report.

CDP chairman James Cameron said: “Investors are saying that climate change can impact shareholder value both positively and negatively and the market needs information to assess and value the issue. Companies are now acknowledging they should communicate what they know to their investors, or at the very least find out what they don’t know.”

The report also showed that investment in the clean technology sector has quadrupled to US2.5bn over the past two years with R&D funding in renewable energy and energy efficiency as key areas.