Reducing emissions and protecting the competitiveness of energy intensive industries



by Massimo Medugno, general manager Assocarta

The impact assessment accompanying the Commission communication on the “2030 Climate Target Plan” suggests a highly demanding reduction target for ETS emissions of -65% for 2030, while the current ETS level foresees a -21% reduction for 2020 and a -43% for 2030.

Recently, the last February, the Alliance of Energy Intensive Industries (cement, ceramic, chemical industries, paper, steel, glass ecc) has launched the following recommendations for the next ETS revision:

– Effort Sharing Regulation and the ETS Directive need to address sectors currently covered by the Effort Sharing to deliver a fair share of emission reductions;

– the replacement of European production by imports from foreign countries with lesser carbon constraints negatively affects both the Union climate action efforts worldwide and the competitiveness of its industrial basis. For sectors exposed, it is then essential that the ETS system will be able to mitigate the risks of carbon leakage;

– should the Commission consider making these sectors subject to a European carbon market, this should be done through dedicated and separate cap-and-trade systems, without any links to the existing ETS;

– instead of invalidating allowances in the Market Stability Reserve, it must be considered to use them for innovation;

– the allocation of ETS revenues has to support industrial decarbonization;

– with increased carbon prices, indirect carbon costs for the industry will increase and thus, it is essential that adequate state aid for indirect carbon costs is provided. If these revenues instead go to the EU budget, then, fewer resources would be available to provide compensation.

Finally it is urgent the Commission to take the necessary initiatives to ensure that production and emissions reductions related to the COVID-19 outbreak will not unduly reduce the amount of post-2020 free allocation.