Brussels, 05/11/2009 (Agence Europe) - Following a fiery debate in Brussels on 4 November, the European Parliament environment committee, chaired by Jo Leinen (S&D, Germany), approved the list of 164 EU industrial sectors and sub-sectors identified by the European Commission as being exposed to a significant risk of carbon leakage under the revised directive on the EU emissions trading scheme (directive 2009/29/EC, amending directive 2008/87/EC - the “ETS” directive) which will come into force on 1 January 2013. These 164 sectors account for 77% of all emissions produced by the manufacturing industry covered by the ETS.
Carbon leakage is the risk that European industrial installations might relocate to third countries with less stringent constraints on greenhouse gases, allowing them to avoid the demands set by the EU in committing unilaterally to reduce its greenhouse gas emissions by 20% by 2020, even if there is no international climate agreement. To restore fair competition conditions and keep them in the EU, the sectors and sub-sectors that are recognised as being at risk may, under certain conditions, be granted up to 100% free emissions quotas from 2013 to 2020, while installations not exposed to carbon leakage risks will have to, in part, pay for their quotas, with increasing amounts being put up for auction from 2013.
The list, drafted by the Commission under the comitology procedure (with, therefore, the backing of member states) was presented on 18 September with a view to its being adopted by the Commission at the end of the year, as provided for in the ETS directive. It was put, in the form of a draft decision, to Parliament for scrutiny. Parliament had three months to formulate its comments, the only opportunity it would have. Thus it was that, on 4 November, the committee voted on a motion for a resolution formulating a legal objection. The resolution, drafted by 13 MEPs from the Greens, GUE and ALDE groups, led by Satu Hassi (Finnish Green), was critical of the Commission for failing to respect all the criteria set by the directive to determine whether sectors were, indeed, exposed to significant risk. The resolution was rejected by 39 votes to 19, with one abstention.
Pragmatists win day over those assailing laxness
Setting out the reasoning behind the rejection resolution, Hassi said, “The criteria in the directive are quite wide: the entire energy could be given free quotas, but account has to be taken of the action of third countries and energy efficiency in those third countries. These two criteria were not respected by the Commission in preparing the list”. She added, “The Parliament's legal department felt the legal basis of the decision was doubtful, but the decision was not illegal. Our aim is not to take the Commission to the Court of Justice, but to see if the draft decision indeed respects the provisions of the legislation”.
Chris Davies (ALDE, UK) said that the list of sectors excluded from the quota auctions compromised the whole system and he wondered when the Commission would present a pared down list. Corinne Lepage, (Greens, France) went further, stating that “no one is questioning the principle of the lists and our objections within eh framework of the legislation. The real question is whether this list will allow us to achieve or general objectives. Are we not, with such a broad view of excluded sectors, making it impossible to reach our goals. This list is far too broad because it covers 75-80% of European industry. We will unbalance the carbon market and not even reach our target of a 20% reduction in emissions”.
Oreste Rossi (EFD, Italy) voiced indignation that the left-wing MEPs recommended rejecting the list, even though this would "cause more job losses in Europe".
Catherine Soulier (EPP, France), gave three reasons for her support of the Commission's proposal: 1) the list is the result of the consensus between the European Commission, the member states and representatives of industry; 2) it brings in a sustained effort to reduce CO2 emissions and being on the list does not mean that emissions will never be reduced; 3) Article 10 b §1 provides for the list to be revised in the light of the results of the Copenhagen conference.
Karl Heinz Florenz (EPP, Germany) pointed out that the political will of the European Council of December 2008 was very clear that the list of exposed sectors should be adopted at the end of 2009. "The ETS directive would never have seen the light of day if there had not been this assurance", which gives the industrial sector the legal certainty it needs in order to be able to plan its investments.
Speaking on behalf of the European Commission, Stavros Dimas, Commissioner for the Environment, pointed out that the scenario behind the proposed decision is a 20% reduction in emissions by 2020 compared to 1990 figures, but that the ETS directive provides for the list to be revised after Copenhagen, in light of the assessment of the results of international negotiations.
In its draft decision, the European Commission states that Iceland, Norway and Switzerland have committed to reduce their CO2 emissions in the targeted sectors. However, these countries do not represent a major proportion of global production in the said sectors. Assessing their efficiency from the point of view of their carbon footprint would therefore be of little relevance, said the commissioner.
In response to Jo Leinen, who was surprised to see the wine-making industry on the list of sectors at risk, Stavros Dimas replied that "combustion plant is covered by ETS. Wine-making activities are covered for a number of combustion activities. Furthermore, the proportion of trade with third countries in this sector represents 30%. This is also a criterion which needs to be taken into account". Mr Dimas also pointed out that although the list features 164 sectors representing 77% of emissions, not all of the sectors on the list will benefit from a 100% free allocation. Only 10% of the most climatically efficient plant will be affected, in accordance with the benchmarking scheme laid down in the legislation. (A.N./transl.fl).