EP Industry Committee fails to adequately address the risk of carbon leakage and the possible de-location of European industries outside the EU
The Industry Committee of the European Parliament (EP) today in a very narrow vote supported the fundamental principles of the Commission proposal for a revision of the EU Emissions Trading System (EU ETS). The industry has to reduce its greenhouse gas emissions by 21% in 2020 compared to 2005. All emission allowances of electricity generators will be auctionedas of 2013. The Committee proposes that manufacturing industry receives 100% free allowances (the Commission proposed 80%) in 2013 decreasing to full auctioning in 2020. The European People’s Party voted against the text after having failed with its proposal to allocate 100% free allowances, based on benchmarks, to manufacturing industry until an international agreement with equivalent measures for competitors is in force.
EUROFER Director General Gordon Moffat views the outcome of the vote with mixed feelings: “It is a huge step forward that allowances for waste gas recovery, which constitutes about 50% of steel industry’s CO2 emissions, now will not be fully auctioned in 2013 but treated equally with other industry sectors. But the decision on the fundamental principles of the directive falls short in adequately addressing the risk of carbon leakage and the possible de-location of European industries outside the European Union. The uncertainty created by the Commission proposal remains, since it is the Commission which will decide in 2010 which sector or sub-sector may receive a certain percentage of allowances for free. In 2020 any free allocation will fall, regardless of carbon leakage. This could have serious consequences since we are talking about extra costs for the steel industry of about 50 to 100 billion Euros in the period from 2013 to 2020 alone.” However, Moffat welcomed that an international agreement should include a “critical mass of global sectoral production” and that it must be verifiable and enforceable.
The parliamentarians further propose to apply ambitious benchmarks “set at a level of least CO2 intensive output per unit” for installations in each sector receiving free allocation. Member States may exempt small emitters with emissions of less than 25 000 tonnes of CO2 equivalent and combustion installations with a rated thermal input below 35 Megawatts from the system.
On 7 October the EP Environment Committee will decide whether to adopt the proposals of the Industry Committee before the Parliament starts negotiations with the Member States for a first reading agreement in December.
Represented by EUROFER, the European steel industry is the world leader in its sector with a turnover of EUR 140 billion and direct employment of 370 thousand people, producing 200 million tons of steel per year.
Contact
Gordon Moffat, Director General +32 2 738 79 26 (g.moffat@eurofer.be)
Axel Eggert, Director Public Affairs +32 2 738 79 34 (a.eggert@eurofer.be)