Ahead of the European Parliament’s industry, research and energy committee vote on the long-term reform of the emissions trading scheme (2021-2030), the eyes of European industry are fixed on possible investment leakage, while NGO are calling for a level of ambition in the vote that matches the Paris Agreement (see EUROPE 11562 and 11546).
BusinessEurope fears investment leakage. Industry body BusinessEurope published a new survey on Tuesday 11 October showing that 89% of European companies expect to cut investment in Europe if the carbon price (which has fallen below €6 per tonne rather than the Commission’s initially projected €30) were to increase.
Some 71% of respondents, of the 120 companies surveyed, expect any increase in the carbon price to have a negative impact on their investment in the European Economic Area (EEA). The survey also shows that 66% of respondents use or expect to use an internal carbon price for their investment choices.
The argument had already been presented by the European chemicals industry, CEFIC (see EUROPE 11516). This survey “confirms that there is an associated investment leakage risk with this. That is why it is pivotal that the EU ETS directive is properly equipped to respond to the challenge of investment leakage”, stresses BusinessEurope Director General Markus J. Beyrer.
The survey was carried out between July and September 2016 by means of questionnaire sent to 120 EEA-based companies, 71% of which employ more than 250 people. The sectors deemed to be at risk of carbon leakage were well represented: chemicals (18 companies), steel (14), cement (12), paper (9) and hollow glass (6).
WWF says ETS must not benefit polluting industries. WWF points out that the ETS is one of Europe’s key instruments for meeting its target of at least a 40% cut in greenhouse gas emissions by 2030. It does not believe that the reform on the table matches up to the Paris climate agreement and calls on the Parliament to strengthen the text.
“The EU Emissions Trading Scheme should benefit the climate, not polluting companies. It needs to put a meaningful price on carbon pollution in Europe. Tomorrow’s vote on the future of the EU ETS is the litmus test that will tell us if the industry committee members are serious about a low carbon future for our industries”, said Sam Van den Plas, EU climate policy officer at WWF European Policy Office on Wednesday.
WWF is calling on MEPs to target and, over time, phase out the free allocations of emissions allowances to industrial sectors exposed to a risk of carbon leakage, for which, it says, “there is no evidence”.
In the environment committee, the amendments tabled demonstrate the cross-party consensus that the level of ambition must be raised. They are looking, for example, to select a more ambitious starting point for the post-2020 carbon budget and to accelerate the rate at which emissions permits will be removed from the market between 2020 and 2030 via the linear reduction factor (LRF).
The vote in this the lead committee on this issue is scheduled for 8 December. The matter will be on the agenda of the Environment Council of 19 December. The Parliament plenary session vote is expected at the start of next year. (Original version in French by Aminata Niang)