Greece running contrary to global trend of carbon decline

This week’s G7 meeting served to deliver yet another clear message on the future of carbon as an energy source, whose era is gradually approaching its end. The leaders of the world’s seven most industrially advanced nations expressed support for an objective to reduce carbon emissions by between forty and seventy percent by 2050, compared to levels registered in 2010.

The development was preceded, early this month, by an appeal from six major European oil and gas companies for the establishment of an international carbon emissions limit with the aim of limiting the effects of hydrocarbon-based fuels on the environment. No doubt, Europe’s big six in energy have realized that if a global deal is struck in Paris towards the end of this year, at the United Nations Climate Change Conference, their operating costs will subsequently be increased, a prospect that would charter new plans for their future investment strategies.

French energy giant Total’s turn towards a more environmentally friendly business portfolio has become apparent. Its natural gas-related activities make up almost half the company’s business dealings, compared to 35 percent a decade ago. Another key energy group, German electricity company E.ON, is shifting its business plan towards one with greater focus on renewable energy sources (RES). In addition, Enel, Italy’s biggest electricity company, has committed itself to halting all new carbon-related investments, withdrawing power stations running on hydrocarbon-based fuels, and leveling out carbon-related activity by 2050.

Greece is continuing to move in an opposite direction, despite the country’s considerable RES potential. PPC, the main power utility, is still investing in costly and polluting lignite-fueled plants, neglecting both EU objectives for the environment and the financial cost for the country and consumers in Greece. Forecasts tend to agree that the anticipated rise in the cost of carbon emission rights, expected imminently, will soon make lignite-fueled power plants unfeasible.

Greece’s energy policy even includes thoughts about relaunching an older power station, Ptolemaida 3, in Ptolemaida, northern Greece, which incurred serious damages after a fire broke out at the facility last November. This is one of Greece’s oldest and most costly lignite-powered stations. Until recently, PPC had decided to permanently withdraw the unit from the system at the end of 2015, in response to an EU directive concerning new carbon emission limits.

China, which consumes roughly half the world’s carbon, is moving away from its reliance on this energy source at an increasing pace. Consumption of the fuel fell by eight percent in the first quarter this year, compared to the equivalent period a year ago. Carbon imports in China also dropped in the first quarter, by 38 percent.

This trend is also apparent at a European level. Carbon consumption fell by nearly five percent during the same period, while the use of carbon for electricity production between 2008 and 2013 dropped by four percent, according to think-tank Carbon Tracker.

Investors, especially long-term investors, such as pension funds, are also beginning to step back from companies whose market values risk being diminished as a result of the declining trend in carbon consumption. The Bank of America recently graded carbon-related investments as among the highest-risk investments.