The European Commission has proposed an amendment of the Emissions Trading Directive.

The objective is to give the Commission the right to temporarily set aside CO2 allowances and put them back on the market or cancel them altogether at a later stage. The numbers of allowances currently discussed range from 4 million to 1.2 billion. The Commission thinks there is an oversupply of allowances at present and wants to ensure an ‘orderly functioning of the market’.

The Alliance of Energy-Intensive Industries, which includes Eurofer, say the Commission’s proposals now on the table to artificially increase the carbon price in the EU Emissions Trading Scheme will further undermine the competitiveness of the European industry. It will add more costs and create confusion in the ETS market and damage its credibility. It forces industry to operate within a framework which does not provide any legal certainty.

Soaring carbon costs will be passed on by the power sector through higher power prices. The recent Industrial Policy Communication has highlighted that energy costs (electricity) in the EU are twice as expensive as in competing regions such as the US, Korea or Canada. Increasing ETS costs will further add to this competitive disadvantage. European industry cannot offset these additional costs.

The proposed amendment of the ETS is therefore neither helpful nor necessary. The EU ETS emission cap will be met in any case. The industry needs a stable legislative framework to operate in. And it needs political initiatives that strengthen its global competitiveness as well as protect the jobs of its employees.

The EU must stick to the 2020 package developed through full legislative process and not introduce ad hoc amendments to address perceived failings in such an important measure as ETS. The energy intensive industries are ready and willing to participate as they did in 2008 and 2009 in establishing a framework for EU ambitions beyond 2020 which balances EU competitiveness and jobs with energy and sustainability issues.

In the face of recent plant closures, restructuring and lay-offs throughout the whole value chain of European manufacturing industry, the EU should avoid all political measures that would add to the cost burden of its economic base.

The European industry has been struggling for almost four years with recession conditions brought about by the financial and economic crisis. Unemployment has climbed to 25.3M or 10.4% in the EU 27 in September 2012, a historically high level.

The Alliance of Energy-Intensive Industries urges the European Commission to abandon its plans to amend the Emission Trading System (ETS) in a way that would increase energy costs for private and industrial consumers in Europe.