Only energy sector welcomes allowance freeze
By Anne Eckstein | Thursday 26 July 2012
Unsurprisingly, the energy sector is the only one to welcome the European Commission’s plan to limit, during the next compliance period (2013-2020) of the EU’s Emission Trading Scheme (ETS), the auctioning of carbon allowances (see
Europolitics 4473). The other industrial sectors are far more reluctant, while green organisations regret that they did not take things further by increasing the greenhouse gas emissions reduction target to 30%.
Eurelectric welcomes the Commission’s proposal. The organisation notes that the “proposal is a welcome sign that the Commission is prepared to take the necessary steps to restore confidence in the ETS”. Eurelectric stresses that it has been calling for a long time for urgent action to rebalance supply and demand on the carbon market in order to guarantee that the ETS will reach its goal of promoting decarbonisation. Eurelectric also calls for the EU to commit more long-term and to set CO
2 emissions reduction targets on the 2030 horizon to give the industry the necessary predictability and security.
The European Wind Energy Association (EWEA) is also satisfied, saying that “the European Commission has finally taken the first step towards boosting the carbon price in the short term”. But a second step is necessary, adds EWEA. A permanent solution to the oversupply of carbon allowances needs to be found to ensure a high and stable future price. According to EWEA, the amount of allowances put on the market up until 2020 needs to be reduced by 2.6 billion.
BusinessEurope reacted by recalling that, on 27 June, it addressed a letter to Commission President José Manuel Barroso, warning the Commission not to make any rushed decisions to change the way the ETS works (4454). BusinessEurope stressed how important it is to involve all the interested parties in the future debate on the level of ambition of the ETS on the 2030 horizon and to find long-term solutions to meet the energy and climate change-related challenges.
Speaking for the steel industry, Eurofer is against an artificial increase in the price of CO
2. “Industry requires certainty. A cancellation of allowances is a de facto increase of the CO
2 target for 2020 beyond the 21% as set by the directive,” Gordon Moffat, Eurofer’s director-general, pointed out. Moffat called on the member states, the European Parliament and the Commission to “stick to their promises and stop additional unilateral policy while other countries haven’t committed to anything”. “This policy is risking Europe’s industrial base and economic prosperity,” Eurofer insisted, calling for “a sectoral approach based on economically viable technologies. The ‘one size fits all’ policy must end,” Eurofer concluded. The steelmakers also fear that this measure will create competition distortions within the sector since the producers that will be forced to buy allowances will be penalised compared to those that could work with their existing allowances.
The European Association of Metals, Eurométaux, agrees: “Europe’s ETS policy should not only be directed at a part of industry for which high carbon costs are beneficial. Such a policy is clearly to the detriment of the larger part of the energy-intensive manufacturing industry, for which higher carbon costs and market uncertainty lead to even less investment in low-carbon technology in Europe”. The measure, Eurométaux warns, will lead to multiple closures of companies and investment outside Europe, exacerbating the EU’s already heavy dependency on commodities like copper or aluminium.
Greenpeace and WWF “cautiously welcomed” the Commission’s plan. The two NGOs note that “the European Commission rightly recognises that the EU’s ETS has been suffering from a surplus of allowances, which has driven down the price of carbon and reduced the scheme’s ability to encourage polluting companies to cut greenhouse gases”. But Greenpeace and WWF expressed “disappointment” that the Commission have not yet suggested structural measures to reform the carbon market, such as permanently removing allowances or increasing the EU’s emission reduction target. Further reforms are necessary. “For the ETS to deliver fully, the EU must increase its commitment to cut carbon emissions to at least 30% by 2020,” said Greenpeace and WWF.