The vision of an 80 to 95% reduction in EU emissions by 2050 was intended as an aspirational objective by the member states conditional on technology breakthrough and action by other economies. Instead, it is being interpreted by DG Climate as a firm objective regardless of technical possibilities. This will lead to the deindustrialisation of Europe.

Now Japan has buried its ambitions for an emissions trading system, the EU is completely isolated and should reconsider this concept as the US and Australia did previously. Japan has abandoned the idea of a national emissions trading system recognising that this would discourage investment, hamper growth, jeopardize the competitive position of its industry and be environmentally counter-productive.

Eurofer director general Gordon Moffat referring to the draft ‘Low Carbon Economy Roadmap 2050’ which will be put forward for adoption by the European Commission on 8th March says: “Rightly there wasn’t sufficient support from member states for a unilateral move by the EU from its 20% climate target to 30% by 2020. Now the roadmap is trying to get this through the backdoor”

“The confiscation of allowances from the emissions trading system, as proposed by the roadmap, will have exactly the same effect as a unilateral move to 30%, this is unacceptable. We hope member states will not fall into this trap”, says Moffat.

The models used by the Commission rely on biased assumptions which systematically underestimate the negative effects on industry and employment. The models do not take into consideration the stringency of the benchmarks, in particular for steel where they are technically unachievable. The models also overlook the impact of the decreasing cap and the renewables bill on power prices. Furthermore the study shows a limited effect on employment because it assumes that the revenue from auctioning and from the carbon tax is fully recycled to reduce the costs of labour whereas member states have no intention to do so.

The GHG reduction levels under discussion are irrelevant for industries like steel with process emissions that cannot be squeezed indefinitely. Unilateral action from the EU will simply lead to carbon and jobs leakage already in the short-run well before 2020.

“To get any sympathy from industry, there must be a clear commitment for full compensation and free allocation at the level of best performance. Even so, unless the technology is available to allow these reductions, industry would like to know just how it can be done”, says Mr Moffat.