The compromise proposal, obtained by EurActiv France, calls on the European Commission to 'rapidly' produce figures that set a threshold to quantify the risk of certain industries becoming exposed to competition by third countries with less stringent CO2 reduction regimes (EurActiv France 20/11/08).
However, the proposal did not appear to satisfy Poland. Mikolaj Dowgielewicz, the country's secretary of state for European affairs, told AFP: "The proposed measures open the door to the phenomenon of windfall profits for power companies. Our objective is not to create more profits for energy companies. Our objective is to protect consumers."
Figures point to a likely increase in operating costs, notably higher electricity prices that result from a restriction on CO2 emissions allowances foreseen under the revised EU Emissions Trading Scheme (EU ETS; see EurActiv LinksDossier), due to take effect in 2013. The level of exposure to competition from third-country imports of similar products would also need to be factored into the equation, according to the draft.
Industry sectors that would qualify, based on those figures, for exemptions to EU ETS obligation would, however, need to respect best technology benchmarks set at European level, the text adds.
Member states want the Commission to put forward the necessary data by 30 June 2009. Brussels has repeatedly said this date is too early since it could send the wrong signal to ongoing international negotiations towards a successor to the Kyoto Protocol, due to be finalised in December 2009 in Copenhagen. The European Parliament also opposes an identification of sectors before Copenhagen.
Commission and Parliament are also likely to oppose calls by the French Presidency to allow member states like Poland, which rely on coal for more than 60% of their power generation portfolio, to give their power companies temporary exemptions (from 2013 to 2016) to full EU ETS permit auctioning obligations.
The French Presidency is also seeking to avoid earmarking revenues from auctioning permits. The Parliament has floated the idea of pre-allocating 100% of the funds, with at least half explicitly going to emissions reduction and climate change adaptation aid, among other things. France takes a much less progressive stance, proposing that 50% of the revenue from auctioning permits should be used to reduce greenhouse gas emissions and develop a low carbon economy.
France also demands "political engagement of the member states," signalling that the governments are not willing to relinquish any authority over the use of the revenues to national parliaments.
Yet another bone of contention has been financing for Carbon Capture and Storage (CCS; see EurActiv LinksDossier). The Parliament has proposed using part of the new entrants' reserve under the ETS to finance CCS demonstration projects in the region of up to 500 million tonnes of CO2 equivalent. The French Presidency wants to bring this down to 100–200 million tonnes' worth of allowances and add a condition for co-financing of the public and private sectors, which would oblige the industry to take on a significant part of the burden.
The Council, Commission and Parliament are due to continue the trialogue next Tuesday (25 November) to reach a deal to be agreed at the European Council on 17 December.
