EUETS Post 2020: Energy-Intensive Industries say ‘no’ to Tiered Approach

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EU energy-intensive industries call for a predictable and stable policy framework that supports innovation and long-term industrial investments. This will allow them maintaining production in Europe, and investing to reduce greenhouse gas emissions.

The future EUETS framework should give all sectors an equal opportunity to thrive in Europe. Best performers exposed to carbon leakage should not be penalized with additional costs. But:

The proposed ‘Tiered Approach’ impacts seriously the majority of energy-intensive industries in the EU and their associated value chains!

because :

  • it would reserve free allowances for some sectors at the expense of others.
  • it has neither economic nor environmental logic.
  • it could well prove to have been unnecessary to prevent a Cross Sectoral Correction factor (CSCF).

Several alternatives to to the ‘Tiered Approach’ exist, which include a lower auctioning share (52% instead of 57%), the application of a dynamic allocation and a fully flexible reserve for growth that would deliver full and effective carbon leakage protection without the need for arbitrary discrimination.

See full position paper of 27 September 2016