EU industry warns about carbon trading and renewables

The industry lobby group BusinessEurope has warned that the EU must focus more on energy efficiency, rather than renewable energies and emissions trading, if it wants to prevent energy-intensive industries such as chemicals and steel-making from taking their operations elsewhere.

A revised and strengthened EU Emissions Trading Scheme (EU ETS) will cost some companies their “yearly net earnings or more”, BusinessEurope’s President Ernest-Antoine Seillière told journalists in Brussels on Monday 26 November.

Seillière expressed industry concern that a shift in the EU ETS towards full auctioning of emission permits is “so problematic” that increasing costs could force companies to move outside the EU to countries where CO2 emissions are cheaper. 

Full auctioning, an idea currently being discussed within the Commission, would signal a significant modification of the current system, under which member-state authorities allocate a percentage of permits to industry free of charge. During the last trading period (2005-2007), over-allocation of permits contributed to a crash in the carbon price.

The Commission is expected to put forward its proposals on a revised EU ETS for the post-2012 trading period on 23 January, along with a package of proposals on renewable energies and a communication on carbon capture and storage (CCS).

BusinessEurope argues the EU executive should focus more on realising the full potential of energy efficiency improvements rather than tightening the bloc’s carbon market or pushing for “difficult to achieve” renewable energy targets. 

A change in depreciation and public procurement rules, more public information campaigns, ‘positive incentives’ and mandatory eco-efficiency requirements should be part of EU efforts to increase energy efficiency improvements in buildings and industrial processes, according to Folker Franz, BusinessEurope’s Senior Advisor for Environmental Affairs.

In response to a reporter’s question about whether the renewables industry had been consulted during the formulation of the group’s position, Seillière explained that BusinessEurope is not against renewable energies as such, but expressed severe doubts about the feasibility of reaching a 20% share of renewable energy use in the EU by 2020, a position the group has expressed previously.  

The EU’s renewable energy industry, however, has argued that the 20% target is more than feasible given the right incentive structures.

Read more with Euractiv

EU struggling to secure funds for 'low carbon future'

The European Commission has proposed industrial initiatives and greater research efforts as part of plans to increase the uptake of low CO2 technologies in the EU, but postponed difficult financing questions to next year.