The European Steel Association, Eurofer, is disappointed by the European Parliament's ENVI Committee's vote to pave the way for withholding CO2 emissions allowances from the European carbon market.

Gordon Moffat, Director General of Eurofer commented: "Artificially increasing the carbon price by withholding or removing allowances will undermine the competitiveness of European industries by increasing energy bills even further. A higher carbon price simply adds to the cost of reaching the target of 21% emissions reduction by 2020."

ENVI, the Committee for Environment, Public Health and Food Safety, voted in favour of a proposal by the European Commission to amend the Emissions Trading Scheme (ETS) in a way that would make it legal to modify the rules for auctioning allowances. This is a precondition for the actual backloading plan, the aim of which is to withdraw 900 million emissions allowances from the market.

The Parliament's ITRE Committee (Industry, Research and Energy) rejected this on January 24. The proposal still has to be voted on by the plenary of the European Parliament.

Eurofer emphasises that the proposal is an attempt to manipulate carbon prices through political intervention. The EU Emissions Trading Scheme, the trade body points out, was invented as cost-effective, market-based instrument to reduce emissions from industry. "The ETS is working and the emissions target will be reached," Gordon Moffat explains. "Current carbon prices reflect the economic downturn in Europe, which only proves that the ETS is working as intended."

If accepted by the European Parliament, the backloading proposal will inevitably lead to additional cost increases, especially for energy-intensive sectors like the steel industry. These increases occur in the EU only and will further weaken international competitiveness of the industry. "Gas prices in the EU are three times higher than in the USA and electricity costs twice as much in Europe. Deindustrialisation is already a reality in Europe and companies state energy cost as the main reason for investing elsewhere in the world," Gordon Moffat points out.

Eurofer supports a sound climate policy that goes hand in hand with social and economic objectives. The steel association calls on the EU to maintain the ETS in the way it was designed until 2020 and base its post 2020 climate policies on the technical possibilities for each sector to reduce its emissions further in an economically viable way.

The European steel industry is a world leader in its sector with a turnover of €170bn and directly employs 360000 highly skilled people, producing on average 190Mt of steel per year. More than 500 steel production and processing sites in 23 EU member states provide direct and indirect employment and a living for millions of European citizens.

e-mail mail@eurofer.be web www.eurofer.eu/