Some of Europe's largest business energy suppliers have called on the EU to adjust the Emission Trading Scheme (ETS) in order to bring stability to the market and drive investment in new technologies.
In a letter to the president of the European Commission Jose Manuel Barroso, the EU Corporate Leaders Group on Climate Change (EUCLG) warned current policies are not enough to provide an incentive for firms to go green.
Executive vice-president of CO2 for Shell Dr Graeme Sweeney stated: "The CO2 price is currently too low to drive the essential energy efficiency measures and support the development of low carbon technologies at the required speed and scale."
He said the ETS needs to be "recalibrated" to drive up the cost of emissions in order to support a move towards a greener economy.
Current plans to encourage more environmentally-friendly technology have been hampered by the economic crisis affecting the eurozone, the EUCLG explained, which has created a downward pressure on carbon prices and hindered the effectiveness of the ETS scheme.
The cross sector business leaders, which include energy suppliers, manufacturers and communications firms, urged the EU to take swift action in order to get the programme for decarbonisation back on track.
It recommended withholding carbon allowances in Phase III auctions, which chief executive of Dong energy Andres Eldrup said would offer a chance to "repair the ETS and make low carbon investments - especially in offshore wind power - still more competitive."
Mr Sweeney added that by increasing the cost of emitting harmful gases, businesses will be incentivised to improve their energy efficiency and support the development of new low-carbon technologies such as renewable power sources and carbon capture and storage schemes.
Recently, the manufacturers' association EEF called on the government to rethink its green targets and put in place specific goals to be achieved by 2030.
Chief executive of the organisation Terry Scuoler said: "We now need a newer, more positive approach that gives industry the certainty and incentives to invest and understands the competitive pressures they are facing."
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