The European Commission just announced it will cut free allocation of emission credits to industry with an additional 6% in 2013 - adding up to a startling 18% extra cut by 2020. The decision is very harsh as even the most carbon efficient companies in Europe will not receive the credits they need to operate.
It is time to make a reality check on all recent and misleading statements implying that EU ETS does not impact European industry.
The idea was simple. Industries receive free allocation of credits based on a benchmark. Only the 5% best installations receive what they need, all others have to buy carbon credits.
The decision on the so-called C-factor is part of the ETS directive. However, the factor was thought to come into force only at the end of the 2013-2020 trading period. It will now apply from the start and will be very high by 2020. This sheds a completely new light on the discussions around backloading in Brussels in the last months. Several hundred million Euros will be added to the already uncompetitive energy costs in Europe, just for the paper industry alone.
The publication of the C-factor takes place without the paper mills knowing their exact 2013 allocation yet, which causes increasing unrest in the industry. CEPI calls upon the Commission to publish the 2013 allocation data immediately.
“The huge cut in allowances is very disappointing for CEPI members, and a wakeup call for the discussions on ETS in Europe”, said Marco Mensink, CEPI Deputy Director General. “The European Commission will have to give maximum clarity on the calculations made. Not even two years ago the Commission was working on innovation tools based on an expected surplus of free credits, which would not have to be allocated. Now we start the period with a 6% shortage for this year alone.”
This information should have been on the table in the backloading debate where proponents of strong measures stated that the industry will not have to buy any credits in the coming period. This is simply not true. This is a wake-up call for the Member States as well.
European CEOs were just told today that investments in Europe face another layer of costs. Carbon leakage is real – it is the loss of investments Europe urgently needs.
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Note to the Editor
CEPI aisbl - The Confederation of European Paper Industries
The Confederation of European Paper Industries (CEPI) is a Brussels-based non-profit organisation regrouping the European pulp and paper industry and championing industry’s achievements and the benefits of its products. Through its 18 member countries (17 European Union members plus Norway) CEPI represents some 520 pulp, paper and board producing companies across Europe, ranging from small and medium sized companies to multi-nationals, and 950 paper mills. Together they represent 24% of world production.
European Commission documents announcing the C-factor:
http://ec.europa.eu/clima/policies/ets/cap/allocation/docs/20130905_nim_en.pdf - page 14