Enel CEO: Carbon markets ‘irrelevant’ for rise of renewables

Schemes such as the EU's Emissions Trading System may help with switching from coal to gas, but will not have a big impact on renewables, Francesco Starace tells Recharge.

One of the most influential thinkers in the European utility sector, Enel chief executive Francesco Starace, has told Recharge that the price of carbon will not have a major influence on the future primacy of renewable energy.

“Are carbon markets instrumental for renewables? I'm telling you, it's irrelevant,”he tells Recharge.

“We shouldn't kid ourselves that carbon markets are the key to renewable growth. Renewables are going to take over both gas and coal, regardless of carbon markets. [It’s] just a question of a little earlier or a little later.”

Starace was president of power industry association Eurelectric until May, where he helped push the sector to adopt 100% decarbonisation targets, and heads a major international company that is one of the world's largest renewables developers and is pushing aggressively into the electrification of heat and transport.

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He tells Recharge that the EU Emissions Trading System (ETS), which was launched in 2005, is only now beginning to work, following last year’s reduction in the number of surplus allowances on the market. The price of an EU allowance (EUA) stagnated at between €3 and €8 from 2013 to 2018, but since the revision in February 2018, the price has risen to around €25.

“The funny thing is, why were carbon markets devised and designed at the very beginning? Was it because of renewables or was it because we wanted to switch from coal to gas? What was the original intent?,” he says. “No-one had renewables in mind. At that time [in 2005], renewables only flew with incentives, they were so expensive. They were so wildly out there. Carbon markets didn't see the light because of renewables. They saw the light because of switching from coal to gas. Let's remember this. That was the aim. So now, are they effective at doing that? The first indications, like I said, it's just the first months show that yes, that's n ow somehow happening.

“Everything can be improved, but for God's sake, let it start first. Let's see how it works and if we then want to tinker with it… but let's make it go on. That, I think, was the winning argument. I think the carbon market's just starting now, so I think we can have this discussion, are they working really exactly, precisely as anticipated? Maybe a year from now. It's just something that is fine tuning at this very moment.”