ETS reform - BUSINESSEUROPE opinion on the ITRE draft opinion
STATEMENT 18 May 2016
ETS reform BUSINESSEUROPE opinion on the ITRE draft opinion On 24 May, members of the European Parliament Industry, Research and Energy Committee (ITRE) will exchange views on the rapporteur draft opinion on the Commission’s proposal to review the EU Emissions Trading System (ETS). While the report includes some positive elements, several core issues need to be substantially improved. BUSINESSEUROPE is strongly committed to make the system work for all the covered sectors i.e. a meaningful carbon price for investments in the energy sector as well as full security that the 10% best performing installations will get 100% of free allowances up to their benchmark. This is essential on the one hand to stimulate investments in the energy sector and on the other hand to support the global competitiveness of industry. We believe that the ITRE rapporteur’s draft opinion does not take into account this double objective. On the contrary, a proposal such as the “tiered” approach disregards that competitiveness depends on a strong industrial value chain. A better solution exists, which is to modify the ratio of 57% auctioning vs. 43% free allowances. This would help to avoid many difficulties without disturbing the carbon market or questioning the environmental integrity of the system. The table below compares BUSINESSEUROPE priorities with the draft opinion. More detailed views and analysis of BUSINESSEUROPE on the EU ETS reform are available in our February 2016 position paper as well as in a recent statement on the “tiered” approach. BUSINESSEUROPE priorities
ITRE draft opinion
Ensure enough free allowances to meet best performers’ needs (current deficit of 400-800 million allowances)
Slightly increase (i.e. from 400 to 465 million allowances) the new entrants reserve for growth while keeping the 57% vs. 43% ratio.
Adjust better allocation to real industry activity levels.
Limit the proposed extra “dynamicity” to the access of the new entrants reserve for growth.
Set up benchmarks that match the real potential for improvement of each sector.
Keep the arbitrary flat rate of 1% while adding a new sub-option of 0.3%.
Improve the methodology for a sector to be placed on the carbon leakage list.
Remove the possibility for a qualitative assessment.
Avoid a “tiered” approach.
Introduce a “tiered” approach upfront of phase 4.
Set mandatory EU compensation measures to achieve full offsetting of indirect costs in all Member States.
Keep the current state aid regime i.e. lack of compensation in all Member States.
Strengthen the impact of the Innovation Fund.
Increase the size of the fund while proposing new conditions to apply.
Simplify the rules for small emitters.
Propose simplification for small emitters in relation to benchmarks only.
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ETS reform BUSINESSEUROPE opinion on the ITRE draft opinion On 24 May, members of the European Parliament Industry, Research and Energy Committee (ITRE) will exchange views on the rapporteur draft opinion on the Commission’s proposal to review the EU Emissions Trading System (ETS). While the report includes some positive elements, several core issues need to be substantially improved. BUSINESSEUROPE is strongly committed to make the system work for all the covered sectors i.e. a meaningful carbon price for investments in the energy sector as well as full security that the 10% best performing installations will get 100% of free allowances up to their benchmark. This is essential on the one hand to stimulate investments in the energy sector and on the other hand to support the global competitiveness of industry. We believe that the ITRE rapporteur’s draft opinion does not take into account this double objective. On the contrary, a proposal such as the “tiered” approach disregards that competitiveness depends on a strong industrial value chain. A better solution exists, which is to modify the ratio of 57% auctioning vs. 43% free allowances. This would help to avoid many difficulties without disturbing the carbon market or questioning the environmental integrity of the system. The table below compares BUSINESSEUROPE priorities with the draft opinion. More detailed views and analysis of BUSINESSEUROPE on the EU ETS reform are available in our February 2016 position paper as well as in a recent statement on the “tiered” approach. BUSINESSEUROPE priorities
ITRE draft opinion
Ensure enough free allowances to meet best performers’ needs (current deficit of 400-800 million allowances)
Slightly increase (i.e. from 400 to 465 million allowances) the new entrants reserve for growth while keeping the 57% vs. 43% ratio.
Adjust better allocation to real industry activity levels.
Limit the proposed extra “dynamicity” to the access of the new entrants reserve for growth.
Set up benchmarks that match the real potential for improvement of each sector.
Keep the arbitrary flat rate of 1% while adding a new sub-option of 0.3%.
Improve the methodology for a sector to be placed on the carbon leakage list.
Remove the possibility for a qualitative assessment.
Avoid a “tiered” approach.
Introduce a “tiered” approach upfront of phase 4.
Set mandatory EU compensation measures to achieve full offsetting of indirect costs in all Member States.
Keep the current state aid regime i.e. lack of compensation in all Member States.
Strengthen the impact of the Innovation Fund.
Increase the size of the fund while proposing new conditions to apply.
Simplify the rules for small emitters.
Propose simplification for small emitters in relation to benchmarks only.
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