13 oct 2016
ETS vote

ETS vote: Step forward but not enough to avoid investment leakage

Today the European Parliament’s Industry committee (ITRE) voted on the European Commission’s proposal for the reform of the Emission Trading Scheme (ETS). The vote amending the European Commission’s proposal has a number of positive elements, but misses the train on a few others. We urge decision-makers to still improve the draft.

BusinessEurope’s Director General Markus J. Beyrer commented:

“From day one, we have argued that the Commission’s proposal falls short of protecting industries exposed to global competition. It is positive to see that todays’ vote brings some solutions, notably by conditionally increasing the share of free allowances by five percentage points from 43% to 48%. But some other proposals would negatively impact best-in-class companies. We will therefore keep engaging with decision-makers.”

Emission Trading Scheme (ETS)
Emission Trading Scheme (ETS) — ©Dreamstime

BusinessEurope supports the proposal to increase the share of free allowances from 43% to 48% if more free allowances are needed to protect industries exposed to global competition. The proposals to strengthen the Innovation Fund, the use of more accurate companies’ production data (i.e. recent CO2 emissions) and the reference to investment leakage are also positive. But our recent survey shows that the proposed directive must be better equipped to address the challenge of investment leakage.

The vote does not bring satisfactory solutions on other key elements also:

  • On the benchmarks used for allocation of free carbon allowances
  • On the full allocation of free allowances to all installations which are on the level of the “best-in-class”
  • On the qualitative assessment
  • On the way industrial sectors are classified under the carbon leakage list (i.e. NACE vs. PRODCOM), and other points.

 

BusinessEurope calls upon decision-makers to rethink the approach.