CEFIC Calls for Fair Emissions Trading

07.02.2017 -

In a joint letter to policymakers, the European Chemistry Council (CEFIC) and associations representing manufacturers in other sectors have called on the European Parliament (EP) to vote for a “fair” Emissions Trading System (ETS) that is “compatible with the principles of Better Regulation and the guidelines for evidence-based policy making” and against a two-tiered approach, in which industries are treated differently.

The EP is due to vote on changes to the ETS on Feb. 14. In December, its Environment (ENVI) committee drafted a set of compromise amendments, which – from its standpoint – would help to better manage the supply of allowances in the system through the Market Stability Reserve.

Proposed reforms would divide industries into groups, or tiers, and in CEFIC’s view, would protect certain industries at the expense of others, CEFIC noted. This “would introduce an unfair discrimination between sectors,” with the result that “many sectors and even their best companies would suffer severe under allocation as a result of a preferential treatment of few others.”

Instead, the chemicals grouping said, “fairness and equal treatment should be a key principle of policy making.” CEFIC said the reform should enable allocation of free carbon allowances based on recent industrial production and improved emissions performance, “so all sectors performing well in cutting emissions get the opportunity to thrive in Europe.”

Signing the joint letter to the EP were representatives of energy-intensive sectors that claim to represent about 2 million jobs in the EU. The industries  said the “discrimination between industrial sectors goes against the principle set in the October European Council Conclusions that best performing companies in ETS carbon leakage sectors should not bear further carbon costs. Indeed, it would ensure that even best performers in most sectors would bear significant carbon costs.”

The signees said also they were alarmed by the late introduction of “an entirely new proposal for an import inclusion mechanism” for sectors with lower trade intensity. This notion, they argue, is contrary to the principal idea of the carbon leakage risk assessment being based on two main criteria (trade intensity and CO2 intensity) as the import inclusion mechanism only considers the former.

Finally, the industries said the proposed ETS reform “go against the 2016 Paris Agreement” on climate change, which does not contain any suggestions allowing for unilateral trade measures.