Yesterday's EU ETS back loading vote sends the right signal to the rest of the world. We have a market-based system which will deliver the emission reductions it has committed to. Political intervention would have undermined what little investment certainty there is.
Many of course have argued otherwise. Many negative comments in the press today suggest that the vote sends the wrong signal to the rest of the world. However, we would argue that the signal you would want to send to the rest of the world is that you can deliver on your low carbon goals whilst delivering on your growth ambitions.
We should always remind ourselves, that the aim of the EU ETS is to reduce emissions at the least cost. Indeed, that is still a statement on the Commission's website.
Meddling in the EU carbon market would have sent a signal that the market was vulnerable to political interference and that makes it extremely difficult for investors. We need stability, predictability and long-term certainty to create the right conditions for investment in low carbon.
If we ask ourselves where our focus should be now, we should be taking a step back, looking to our future longer-term ambition and working back from that. The Commission and government are now considering the future of the EU ETS post 2020. We must make sure that this is designed correctly to achieve this vision.
EU ETS was designed to be expanded to other economic regions. So far this has achieved limited success, although there are signs that growing numbers of industrialised countries are interested in emissions trading. While most are at the design phase, let's build on the experience and knowledge we have accumulated to creating an EU ETS for the future. Countries will only adopt EU ETS when it is shown to be effective and cost-effective. Furthermore, it must be a scheme which helps to transform internationally competitive industries rather than stifle them.
From the perspective process industries such as the steel sector, we should understand how we can reduce emissions from the sector, globally, rather than just here in the EU, to avoid seeing emissions pop-up elsewhere.
Our efforts therefore should now be channelled on the future design of the EU ETS and in securing a 2015 international agreement which secures the level of global ambition required to tackle climate change.