“Artificially increasing the carbon price by withholding or removing allowances from the emissions trading system will undermine the competitiveness of European industries and increase the energy bill for consumers even more,” says Eurofer Director General Gordon Moffat. “This is counterproductive in times when the EU is struggling to get out of the worst economic crisis since the Second World War.”

After having published its proposal to withhold the 900M CO2 allowances from the EU’s emissions trading market on 12 November, the Commission is expected to publish its report on ‘The State of the European Carbon Market in 2012’ on 14 November. The report includes options to -effectively - further increase the climate target for industry for the year 2020. In 2008, however, the EU had decided to do so only if comparable efforts were made by countries outside the Union. This has not happened so far.

It seems obvious that regulatory measures adding to the cost burden of the industry must by all means be avoided in the current situation. Furthermore, the European Commission damages the credibility of the Emissions Trading System (ETS) by proposing ad-hoc amendments in the legislative framework.

The Commission claims that such measures are necessary to ensure an ‘orderly functioning of the market’. The truth is that the current carbon price is the result of supply and demand and, therefore, of a functioning market. The objective of the ETS Directive is to reduce the 2005 CO2 emissions level from industry by 21% in 2020, not a high carbon price. From today’s perspective the carbon targets are met in any case.

Eurofer calls upon the political decision makers to prepare a fundamental reform of the ETS Directive as soon as possible with a view to the years after 2020, which is just eight years from now. Such a reform needs to be based on a sound and credible impact assessment for each sector, in order to protect the manufacturing value chains in Europe. Objectives for industries exposed to international competition need to be based on economically viable techniques as long as a comprehensive global agreement on climate change is not achieved.