Industry calls for EU compensation for indirect CO2 costs

  Industry has urged Brussels to propose an EU-wide scheme to compensate companies for the indirect costs of carbon pricing through higher electricity costs.

  The European Commission should propose “mandatory and harmonised EU compensation measures” to fully offset the costs of the EU emissions trading scheme (ETS) to industry, industry lobby BusinessEurope said.

  Carbon trading and power sectors associations IETA and Eurelectric agreed that an EU-wide approach is required to level the playing field.

  Member states can currently choose to compensate their industry for such costs when electricity suppliers pass on their CO2 allowance costs in power prices, but only a handful of countries have done so and with widely varying amounts of money.

  The industries outlined their views in response to the Commission’s consultation on the EU ETS revision for the period after 2020. It asked how future carbon leakage rules should reflect the commitment by EU leaders in October to compensate industry for both direct and indirect costs of emissions trading after 2020.

  The respondents generally agreed that companies should not receive free allowances to compensate for the costs that they can pass through to their customers.

And there was widespread support for earmarking all ETS revenues for climate action.

  NGO Carbon Market Watch said that member states should be required to report in detail on the policies and projects that they have supported with the revenues. But IETA was more cautious, proposing EU-level guidance rather than mandatory requirements.

  BusinessEurope said that a half of the revenues should be dedicated to decarbonising the ETS sector with the rest directed to tackling carbon leakage.

  Industry and green groups disagreed on what technologies should be funded from the new innovation and modernisation funds, which will be established for the period post-2020 to help tackle emissions in the EU energy sector.

  Eurelectric and IETA believe the innovation fund should be open to all low-carbon technologies with the biggest potential for cost-efficient carbon reductions.

  But NGOs argued that the funds should focus on technologies in line with the EU’s long-term climate goals and ruled out any coal financing as part of efforts to help modernise power generation in Central and Eastern Europe.

  The Commission is expected to table a proposal to revise the ETS in the coming months.

Excerpted from ENDS Europe DAILY