CEMBUREAU: EU-ETS proposal needs to incentivise best performers

The European Commission (EC) recently published the long-awaited post-2020 EU Emissions Trading Scheme (EU-ETS) proposal.

Although the EC acknowledges the importance of continued carbon leakage protection, it maintains the cross-sectoral correction factor, to the disappointment of CEMBUREAU, the European cement association. “Even if the Commission claims its application will be minimised, the allocation to the best performer would be drastically reduced through the combined application with a percentage-based benchmark reduction. Our discussions with the institutions will focus on how to reconcile such an approach with the clear guidance given by the European Council in October 2014 that the most efficient installations in energy-intensive sectors should not face undue carbon costs leading to carbon leakage. It was clearly the intention of Heads of State and Government to incentivise industry to invest in low-carbon technologies while maintaining growth and jobs in Europe. From a first assessment of the proposal, we feel that this balance has not been struck and our competitiveness will be negatively affected. Best performers need full free allocation to be able to further invest and benchmarks that are based on technological feasibility, “ said the association in a statement.

Regarding the list of sectors exposed to carbon leakage, CEMBUREAU has advocated in favour of a list which must be determined on the basis of the cumulative direct and indirect CO₂ cost burden and be applicable for both free allocation and compensation for indirect costs. It should be fixed for the whole phase, in the same way as the benchmark, according to the association. “Fixing the list will give capital intensive businesses with long investment cycles increased certainty and predictability about EU investments. We have also made it clear that the most efficient installations in exposed sectors should not face undue carbon costs – as such, we are not in favour of maintaining the cross sectoral correction factor.”

The  issue of compensation for indirect costs arising as a result of the EU-ETS has been left open to the member states, in the sense that it encourages rather than calling on them to adopt suitable financial measures.