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Shell says opposes tougher EU carbon cut

By Gerard Wynn LONDON | Mon Oct 11, 2010 12:35pm EDT

(Reuters) – Anglo-Dutch oil company Royal Dutch Shell (RDSa.L) opposed tougher European Union carbon emissions targets, as proposed by some EU countries, the company’s head of carbon dioxide (CO2) said.

A unilateral EU move to tighten its carbon caps before other countries followed suit would entail “very real business risks,” Graeme Sweeney told Reuters on Monday.

An EU draft document said in April a 30 percent target would be “technically feasible and economically affordable,” especially after recession had cut EU industrial carbon emissions.

And in June, Britain, France, and Sweden’s environment ministers said they supported EU plans to move to a deeper, 30 percent cut by 2020, compared with 1990 levels. But Italy, east European countries, and some business lobbies were opposed, saying it would impose higher costs on industry.

“There are very real business risks that arise from this kind of potential change in policy,” said Sweeney.

“We would not support the unilateral move to 30 percent,” he said, adding Shell favored a floor price in the 27-country bloc’s emissions trading scheme, after plummeting industrial production led to a surplus of carbon emissions permits.

“The depth of the recession was particularly significant, and that creates the case for recalibration. This would probably be best achieved by withdrawing some allowances between 2013 and 2020.”

U.N. climate talks have failed to agree a new climate deal after the present round of the Kyoto Protocol expires in 2012, and made little headway last week in China.

Part of the deadlock is centered around a reluctance by countries to move first, especially before the two biggest emitters — China and the United States. That prompted an EU debate whether the bloc should move unilaterally to kick-start the process.

In February, Shell struck a deal with Brazilian group Cosan (CSAN3.SA) to create a $21 billion-a-year ethanol joint venture, which Sweeney pointed to as evidence the company was committed to low-carbon technologies.

Sugar-based ethanol is widely considered one of the lowest carbon alternative road transport fuels to oil.

Sweeney said Shell supported California’s green law, called AB 32 and aimed at cutting the state’s carbon emissions to 1990 levels by 2020, a move opposed by some oil companies.

On November 2, Californians will vote on a proposal to put the law on hold.

The oil major also did not oppose mooted Environmental Protection Agency regulation of U.S. greenhouse gases, depending on how that was implemented, he said.

(Reporting by Gerard Wynn, Nina Chestney and Daniel Fineren, Editing by Dan Lalor)

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