E.ON AG (EOAN.XE) said Friday the European Union's carbon dioxide emissions trade needs to be "revitalized" and called for a harmonization of the diverse set of rules amongst the individual EU member states.

"The Emissions Trading Scheme is crushed under the weight of member-state dirigisme, a sad remnant of what was once hoped to be a decisive marked-based policy mechanism," Johannes Teyssen, chief executive of Germany's largest energy utility by market value, told reporters at a press briefing in Berlin.

The ETS's failure is also "due in part to the significant reduction in energy demand brought on by Europe 's economic recession" and an unexpectedly rapid expansion of renewable energies, Teyssen said.

He added that the existing diverse set of mechanisms in support for green technologies in the individual EU member states and low prices levels of CO2 allowances has failed in providing incentives for investment in low carbon technology.

His comments come as EU policy makers are lobbying for efforts to increase CO2 allowance prices, which fell to record lows just above EUR6 at the end of last year. The low price level has cast doubt on the effectiveness of the system in encouraging clean investments and reduce CO2 emissions.

The ETS is Europe 's key climate protection instrument aimed at encouraging companies to invest in clean technologies to reduce emissions, rather than buying permits to emit more CO2 on the market. One CO2 allowance entitles its holder to emit one metric ton of CO2.

Teyssen also said that financial support mechanisms in the EU should be incorporated into the ETS.

"As long as renewables have competitive disadvantages [because they are more expensive than conventional energy sources], they could be supported through the awarding of carbon credits," he said.

"Renewables have grown up. If renewables are one day supposed to support the entire supply system, they can and must now face competition," Teyssen said.

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