Despite a compromise found by the European Parliament’s ENVI Committee, Eurofer still regards backloading (reducing the number of ETS CO2 permits available to trade) as an unnecessary intervention into a functioning market for carbon allowances.

“The EU Emissions Trading Scheme is working as it should and Europe is well on track to meet its 2020 reduction targets,” says Gordon Moffat, Director General of the European Steel Association (Eurofer). “Instead of artificially raising carbon costs the Commission must address the competitive disadvantages for industry resulting from European climate and energy policies.”

After the European Parliament had earlier refused to accept the Commission’s proposal to temporarily remove 900 million CO2 emissions allowances from the market (backloading) proposed in April, the proposal has undergone a second reading in the ENVI (Environment, Public Health and Food Safety) Committee on 19 June. The Committee has accepted the proposal with several modifications. It will be voted on in the plenary of the European Parliament in the beginning of July.

The modifications include that reintroduction of withheld certificates shall begin in the year immediately following the year in which certificates have last been withheld. Also, the proposal now says that 600 million allowances will be earmarked for financing the development of innovative low-carbon technologies.

“Of course these modifications might be regarded as improvements compared to the original version. It seems that there is less risk now of emissions allowances being removed from the market permanently.” Gordon Moffat says. “Still, the proposal represents market interference as well as additional, artificial increases in energy prices. It would have been more helpful if all the political energy that went into meddling with the ETS would have been invested in policies that strengthen the competitiveness of European industry.”