Metal industry calls for EU ETS backloading rethink

The President of the European Commission has been urged to scrap plans that would see carbon backloading within the Emissions Trading Scheme (ETS) in an open letter sent today from CEOs of the largest non-ferrous metal companies.

The letter comes a week after the European Parliament’s Environment Committee voted in favour of amendments to the EU ETS scheme.

MEPs voted for the temporary withdrawal of carbon permits from the market, known as backloading in a bid to lift the price of carbon after it plunged below €5 per tonne in January.

If ratified by the European Council, the move could see the withholding of 900 million European Union Allowances (EUAs) and is seen by many as a way to reverse the downward trend of carbon prices.

However, the non-ferrous metal industry argues that the temporary measure will have a detrimental effect on the industry’s global competitiveness, while increasing industry closures and carbon leakage.

The industry is also concerned that backloading will cause investments to be relocated outside Europe contrary to the Commission’s goal of increasing industry’s share in the EU GDP to 20% by 2020.

President of trade association Eurometaux Oliver Bell argued there should be concrete long-term solutions for the redesign of the EU ETS.

The signatories – CEOs of companies such as Hydro, Rio Tinto , Alcoa, Wieland werke – called for a review of the EU ETS to include benchmark-based EU allocations for direct and indirect emissions to energy intensive industries, allocation based on actual industry production- rather than historic, and a symmetric and reciprocal linkage to other carbon trading schemes.

Bell said: “In our view, the lack of predictability regarding the future EU climate policies and the missing link with the EU objectives in terms of reindustrialisation, are major obstacles for our industries making the necessary investments. The retention of the industry in Europe offers the biggest potential in emissions’ reductions while safeguarding skills and employment.”

Conor McGlone

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