On 28th February a vote is scheduled in the European Parliament on a series of amendments to the Energy Efficiency Directive aimed at the ‘set aside’ of ETS allowances. The aim of this confiscation of allowances is to artificially rise the carbon price which is, as a result of the economic crisis, at very low levels.

However, in an interview with Euractiv last week, Commissioner Hedegaard said “we think it’s important to have a market-based system. None of us should be surprised when there is a huge crisis in Europe, and production is coming down, it is no wonder then that in a market-based system, that demand will come down and therefore also the price. We will be in for so much more trouble if we had a politically regulated system all the time.”

Eurofer’s director general, Gordon Moffat comments “The low carbon price – which is just a snap-shot of price development – cannot serve as an excuse to introduce a floor price, a set aside or any annulation of allowances, as currently proposed by some groups in the European Parliament.”

The industries covered by the ETS are committed to contribute to the 21% emission reduction obligation by 2020 compared to 2005. Article 1 of the ETS Directive is clear: This Directive establishes a scheme for greenhouse gas emission allowance trading within the Community in order to promote reductions of greenhouse gas emissions in a cost-effective and economically efficient manner.

Artificially manipulating the ETS to raise carbon prices would be directly contrary to the text of the Directive and an admission by Europe that the ETS, as currently structured simply does not work. It would put in question the very credibility of European climate change policy.

Eurofer continues to support the EU’s objective to reduce CO2 emissions by 20% by 2020. However it maintains the view that climate change policy must secure equal treatment internationally of globally traded, energy-intensive goods and must provide for European industry the opportunity to function, prosper and grow in the same way as its competitors worldwide.