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The Parliament, the Council and the Commission enter now the trilogue negotiations that will shape the ETS directive after 2020.
We, the 17 signatories of this paper, energy-intensive sectors representing about 2 million jobs in the EU and comprising many SME’s, are fully committed in taking our share of responsibilities and reducing our emissions.
However, we are also very concerned by the impact that some proposed measures would have on our global competitiveness.
We stand by one principle: sufficient free allowances must be available to allocate every carbon leakage installation at the level of the benchmark, as to avoid additional direct and indirect costs, resulting from the implementation of the ETS that are not faced by our non-EU competitors.
This is true more than ever, especially when some measures, which have been proposed without any impact assessment on our sectors, might have a dramatic impact on our competitiveness if adopted without the necessary flexibility in the share of free allocation, like the permanent cancellation of allowances, or the doubling of the intake rate of the MSR.
We therefore ask the trilogue negotiators to acknowledge, in their final compromise, the mutual importance of our sectors for the EU economy, in particular for European jobs, and all our economic value chains by:
1) Ensuring enough free allowances are available to allocate all carbon leakage installations at the level of the benchmark. This is not a free lunch for industry as less than 5% of the installations will receive enough to produce, the remaining 95% will have to buy allowances. We therefore support the Parliament proposal to reduce the auctioning share by max 5% (from 57% to 52%) if the CSCF is necessary.
2) Rejecting any approach which aims at discriminating a few from other sectors exposed to carbon leakage risks, namely the “tiered CSCF” in the event that the 5% reduction mentioned above is not sufficient. This 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, a tiered CSCF would entail that even best performers in most sectors would bear significant carbon costs.
3) Supporting the proposal from the Parliament by which the Innovation fund is fully financed from the auctioning share.
1. Cefic - European Chemical Industry Council
2. CEMBUREAU – European Cement Association
3. CEPI – Confederation of European Paper Industries
4. Cerame-Unie - European Ceramic Industry Association
5. EDG – European Domestic Glass Association
6. Epmf – European Precious Metals Federation
7. European Copper Institute
8. ESGA – European Special Glass Association
9. EUROALLIAGES - Association of European ferro-Alloy producers
10. EUROGYPSUM - Gypsum Industry
11. EuLA – European Lime Association
12. EXCA - European Expanded Clay Association
13. FEVE – The European Container Glass Association
14. FuelsEurope - European Petroleum Refining Industry
15. Glass Fibre Europe – The European Glass Fibre Producers Association
16. Nickel INSTITUTE
17. International Zinc Association
In view of the European Commission's publication of its Winter Energy package, the European paper industry has compiled a position paper outlining its stance on key aspects of the proposal. Here are our key messages:
Deliverables expected by “Clean energy for all Europeans” package, as a whole:
• Promotion of cost-competitive energy prices
• Consistency between policy measures
• Stability and predictability of the regulatory framework
Deliverables expected by specific legislative proposals:
• Allowing for market-based prices to show real value of electricity
• RES generators should participate in the markets in the same way as all other generators
• Subsidies to RES-E should not be allowed to distort wood supply markets
• Security of electricity supply to energy intensive industry must be secured
• Demand flexibility should be voluntary and rewarded
• The benefits of CHP should be recognised (efficiency, cost effective, energy security, resource efficiency)
• EU should not create more bureaucracy or official bodies / authorities
Energy Union Governance
• No to a binding cap on energy consumption impeding industrial growth
• Increased mobilisation of forest biomass is essential in reaching the 2030 renewable energy target
• Need for a real focus on industrial competitiveness
• Reduction of administrative burden for business needs to be prioritised
• Need to avoid/minimise policy conflicts and overlaps
• The directive should not set a binding EU cap on energy consumption
• Member States should be allowed to set their own indicative targets
• Costs and potentials varies across Member States: there is no one-size-fits-all energy savings trajectory
• Equal footing between obligation schemes and alternative measures needs to be preserved
• Cogeneration to remain at the core of the Energy Efficiency Directive
• Support schemes should not distort wood markets and should stimulate supply of wood
• Opening up to national schemes to cross-border participation in electricity markets should lead to more market integration, not to harmonised subsidies
• Guarantees of origin should remain as trade description, not to be used as subsidies
• There is no “one size fits all” in heating and cooling: focus should be on flexibility and cost-efficiency
• Emission reduction in transport should cost-efficiently drive renewable energies in transport (RES-T) integration into the market while not resulting in transportation costs increased
• Our industry is an emerging producer of RES-T solutions mainly from wastes and residues, such as advanced biofuels, biogas, excess electricity from bio-based pulp and paper mills...
• Bureaucracy and costs should be avoided when implementing sustainability criteria
The full position paper can be consulted via the link below.
Following today’s vote at plenary on the Emissions Trading System the Confederation of European Paper Industries (CEPI) is overall encouraged by the compromise text reached. There is much in the agreement that the industry can be positive about, retaining many of the key components of the compromise text agreed the Environment committee (ENVI) stage.
“The ETS has moved a step further on its pro-investment track. Although pitfalls still remain at Council level we are confident that the current text can be improved on” says Nicola Rega, Energy and Climate Change Director at CEPI
The industry commends several key aspects of the Parliament’s decision:
• Reemphasising the need for all sectors to contribute to reducing carbon emissions
• Encouragement of early movers investing in low-carbon technologies
• Maintaining flexibility in setting the auction share
• A first step in finding solutions to help member states with compensation for indirect carbon costs
• The development of a wider-ranging fund for innovation supporting industry transition towards a low-carbon economy
Unfortunately, the macro-agreement at the core of the decision by the Parliament still maintains traces of discrimination between sectors, ultimately rewarding those investing the least in carbon emission reductions. But we are confident that this environmentally and legally questionable element will be removed as the next stage of the negotiations. This would guarantee that fairness remains a core component of the ETS.
For more information, please contact Nicola Rega at email@example.com or by phone at (+32) 485 40 34 12
For press related enquiries, please contact Ben Kennard at firstname.lastname@example.org or by phone at (+32 487 39 21 82)
We, the signatories of this paper, energy-intensive sectors representing about 2 million jobs in the EU and comprising many SME’s, are under direct impact of the EU ETS and are recognized as exposed to carbon, investment and employment leakage.
We ask Members of the European Parliament to acknowledge the mutual importance of our sectors for the EU economy, in particular for European jobs in your constituencies, and all our economic value chains by fully rejecting any “tiered approach” to free allocation and voting against it.
In order to ensure an equal level playing field for all energy-intensive industries, we call for the rejection of all approaches which aim at discriminating a few from other sectors exposed to carbon leakage risks, namely: the “tiered approach” to free allowance allocation, the “tiered CSCF” and the “import inclusion mechanism”.
This 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.
We appreciate that all policy makers want to avoid undue carbon costs to industry and the triggering of the cross-sectoral correction factor (CSCF, reduces benchmark-based allocation to undertakings). The fairest and most effective way to provide eligible companies with the allowances needed for controlling the carbon leakage risk and still avoiding the CSCF is to increase the free allocation share and to reduce the auctioning volume accordingly. However, we are concerned by the ENVI proposal to exclude only certain sectors from the application of the CSCF, via the so-called “tiered CSCF”. Other sectors in turn would be severely undersupplied. Again this approach would arbitrarily differentiate between different European industries. Protection of some sectors should not be achieved at the expense of the others. Such segregation would also bring into question the environmental integrity of the scheme.
Moreover, we are alarmed by the late introduction of an entirely new proposal for an “import inclusion mechanism” for sectors with lower trade intensity. This is discriminatory, legally questionable and would limit the ability of certain sectors to compete on a level playing field. The notion 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, it goes against the Paris Agreement which does not contain any suggestions allowing for unilateral trade measures. Overall, it introduces a major change to the future of the ETS scheme increasing the legal uncertainty for the ETS reform post 2020.
We reiterate our opposition to any differentiation between the energy intensive industries and under any form of the “tiered approach” and ask you to reject it in the Plenary.
Today’s vote in Environment Committee of the European Parliament marks another major stepping stone for the ETS review.
“There are no more doubts. The message from the Parliament is unequivocal: Game over for the tiered approach. The time has come to promote and reward low-carbon investments” says Nicola Rega, Climate Change and Energy Director at the Confederation of European Paper Industries (CEPI).
The vote reinforces the decisions already taken by the European Parliament’s Committee on Industry, Research and Energy in mid-October. It underlines the need for all sectors to contribute in reducing carbon emissions; flexibility in setting the auction share; a pragmatic solution to help member states with compensation for indirect carbon costs, and a wider-ranging fund for innovation.
The broad range of political support reached proves that the difficulties negotiators faced over the last months were worth it. We therefore fully congratulate the rapporteur, Ian Duncan, and the shadow rapporteurs Ivo Belet, Jytte Guteland, Gerben-Jan Gerbrandy, Kateřina Konečná, Eleonora Evi, Bas Eickhout and Mireille d’Ornano for their commitment to achieving a common position.
Although these are positive developments, a lot still needs to be achieved ahead of the Council negotiations. In particular, the solutions to address the impact of the cross-sectoral correction factor are far from satisfactory. The attempt to shield more than 50% of industrial emissions from this mechanism is unjustifiable from an environmental, economic and equitable perspective. It doubles the uncertainty connected to the CSCF for less carbon intensive sectors and limits their investment security for low carbon investments. In addition, the last-minute solution to include a border adjustment mechanism into the ETS raises more questions than answers.
A significant investment challenge lies ahead for European manufacturing industry to transform its production base and regain competitiveness. With our positive attitude we will constructively continue to engage with policy-makers to ensure that the ETS will work as a tool to reward low-carbon investments. It is high time we put the ETS on a pro-investment track.
For more information, please contact Nicola Rega at email@example.com or by phone at: +32 485 40 34 12