On 23 October 2001 the European Commission adopted a proposal for a Directive of the European Parliament and of the Council establishing a framework for greenhouse gas emission trading within the European Community and amending Council Directive 96/61/EC (ET).
Eurofer has actively participated in the stakeholder consultation on this subject. Unfortunately, its views and those of the industry in general are hardly reflected in the present proposal. Unless these concerns are taken into consideration, a future Emissions Trading scheme based on this proposal could be very harmful to the steel industry.
The theoretical advantages of emissions trading are undisputed. Nevertheless, the steel industry remains critical about the practical implications and the effect on competition. For example there are a number of sectors not covered in the scope of the proposal that produce materials that are in direct competition with steel.
Eurofer believe:
– participation should be voluntary, not compulsory, at both Member State and company level; and,
– it is essential that any European emissions trading scheme does not damage competitiveness, and that administrative costs are minimized, liquidity is maximized and that the scheme does not conflict with national measures already in place.
Emissions Trading is just one instrument. It is not compatible with existing negotiated agreements in several Member States including UK, Germany, Denmark and the Netherlands. These national initiatives, mostly negotiated long-term agreements, have proved to be successful in the past, and are expected to fulfill the obligations of the burden sharing and sometimes reach far into the Kyoto commitment period. The situation in each Member State is different, which may require different solutions. Therefore industry should be offered the choice to refrain from participating in a EU wide Emissions Trading scheme and instead stick to their commitments under the national initiatives.
If the European Union is going to ratify the Kyoto protocol then burden sharing comes into force. The difference in reduction obligations for the individual Member States easily confuses the discussion on the allocation of targets on the different sectors. It should be clear that allocation of allowances of comparable industries in different member states should not be based on the burden sharing otherwise it would seriously introduce market distortions.