Tighter emissions plan to harm EU's heavy industry
09.01.08 @ 09:29
A plan to tighten the European Union's greenhouse gas emissions trading scheme is likely to cause the loss of some heavy industries to global competition, EU officials have acknowledged ahead of the publication of the new legislation.
The new rules on the bloc's Emissions Trading System (ETS) are expected as part of a post-2012 climate change policy package due to be unveiled by the European Commission on 23 January.
Brussels is planning to set an EU-wide cap on emissions from 2013 and change the current practice whereby member states propose their own quotas and the commission assesses them, according to a report in the Financial Times.
The revised scheme should also eliminate free emissions allocations for the energy sector and refineries and instead put to auction "at least two-thirds of the total quantity of allowances in 2013", compared to the current level of less than 10 percent.
"After 2020, almost 100 percent of permits will be auctioned," EU environment commissioner Stavros Dimas said, Reuters reports.
According to official documents quoted by Financial Times, commission experts admit that the changes will particularly affect Europe's aluminium producers as they are least likely to manage to absorb the increased costs resulting from the proposals.
For chemical-, steel- and cement-makers the main impact would be that they would have to raise prices by between 5 and 48 percent, which would weaken their competitive position against firms from economic superpowers such as the US or China.
The EU executive is reportedly still divided on whether to introduce measures to protect some sectors, either by handing out free emissions permits or by including imports from countries without binding reduction targets in the ETS.
Austrian daily Der Standard reported that the commission's latest draft proposal includes a clause proposed by industry commissioner Gunter Verheugen saying Europe's energy intensive industries should get some permits for free, if the EU's main trading partners do not take concrete steps to fight climate change.
It is estimated that Europe's gross domestic product would fall by 0.1 percent as a result of the proposed changes but the jobs lost in the affected industries would be offset by new opportunities in a low-carbon economy.