Cautious welcome for EU emissions trading plan

Targeted industry sectors call for rules to be "simple, flexible, practical, transparent"

European Commission proposals to launch an EU industrial greenhouse gas emissions trading scheme from 2005 have received a guarded welcome from the industry sectors most likely to participate. Responses to the Commission's plan from a series of EU trade associations reveal a strong industrial consensus on key elements.

Trade associations have been considering the likely implications of an EU emission trading system since the Commission outlined its thoughts in March (ENDS Daily 8 March). A deadline for comments passed on Friday, though the main EU industry federation Unice finalised its response only yesterday.

Unice, plus iron and steel industry association Eurofer, Cembureau for the cement industry and Cefic for the chemicals industry, all welcome the Commission's overall approach but go on to raise concerns over the scheme's detailed design.

For all four associations, key principles for a workable scheme are transparency, simplicity and flexibility. Each calls for companies to be allowed to trade emissions allowances internationally and for full compatibility with any international emissions trading rules, plus between emissions trading and the other Kyoto flexible mechanisms.

The groups warn against their industries being made to bear a disproportionately heavy burden of emissions cuts. No new taxes should be introduced for any sectors involved in trading, they say, while non-trading industry sectors and householders should be asked to make equivalent efforts. All the groups back Commission proposals for a strong compliance system.

The responses also highlight several industry-specific concerns. Cefic argues that emissions reduction targets should be relative rather than absolute to avoid putting the chemical industry's international competitiveness at risk. The association also wants all six Kyoto greenhouse gases to be included in any trading scheme, not just CO2 as the Commission suggests.

Eurofer claims that ambitious emission reduction targets would be counter-productive for the iron and steel industry. The sector's main CO2 emissions are process related rather than due to energy consumption, it says, and are generally being forced higher by environmental controls and development of new steels with better life-cycle environmental characteristics. The association also calls for banking of emissions rights to be allowed.

The most fundamental criticisms of the Commission's proposals come from Cembureau, which questions whether the allowance-based scheme on the table is the right approach and calls for consideration of an alternative "baseline and credit" approach. The association also opposes auctioning of emissions allowances, insisting instead on free distribution, or "grandfathering".

Follow Up:
Unice, tel: +32 2 237 6511; Cefic, tel: +32 2 676 7211; Cembureau, tel: +32 2 234 1024, and comments; Eurofer, tel: +32 2 736 0100.

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