European utilities want carbon price as main climate change tool

By Geert De Clercq

PARIS, Dec 8 (Reuters) - French power generator Engie (Brussels: ENGI.BR - news) and a group of European gas and power utilities called on Tuesday for carbon pricing, rather than targets for increasing renewable energy use, to be the main tool for fighting climate change.

The group, also including Germany's E.ON and RWE (Amsterdam: RW6.AS - news) , Italy's Enel (Milan: ENEL.MI - news) and Spain's Iberdrola (Amsterdam: ID6.AS - news) , wants the European Commission to strengthen its emissions trading scheme to boost carbon prices and help drive investment in low-carbon power.

"We call on political leaders to design an appropriate framework to make low-carbon investment happen," Engie Chief Executive Gerard Mestrallet told a news conference.

The group, called the Magritte initiative after the museum of the Belgian surrealist painter in which they first met, owns more than 50 percent of all power generation capacity in Europe, and has lobbied against renewable energy targets since its foundation two years ago.

While the Magritte group companies operate more than 81 gigawatts of renewables capacity, their gas-fired plants and nuclear stations have suffered as a flood of subsidised solar and wind has created overcapacity and priced their traditional generation assets out of the market.

The group has called for an end to subsidies for mature renewable energies and wants the EU to boost its carbon emissions scheme, whose low prices have failed to boost low-carbon fuels like natural gas and nuclear.

"We believe that the EU's Emission Trading System is the tool strong enough to reach the decarbonisation target," Czech Republic utility CEZ chief Daniel Benes said.

Dutch energy specialist Hendrik Steringa, who researches utilities' business strategies, said the Magritte group's CO2 drive mainly aims to delay the introduction of more renewables.

"They focus on the carbon emissions trading scheme because they know this will take a very long time," Steringa said. "Utilities with a lot of conventional generation assets have lost a lot of terrain, that is why they to try to stall the process."

Mestrallet said there was a false impression the Magritte group is against renewables, adding: "It (Other OTC: ITGL - news) was obvious two years ago that the level of subsidies, with a kind of open-bar system in some countries, was not sustainable."

E.ON chief Johannes Teyssen said the group wants prudent schemes that do not oversubsidise and make sure the lights stay on. "Our message was wrongly interpreted by people who said 'these are the old guys, they must have a hidden agenda'," he said. ($1 = 0.9200 euros) (Editing by David Holmes)