ETS Vote: MEPs act to tackle indirects, but compromise solution ultimately falls short

Date

15 Dec 2016

Sections

Innovation & Enterprise

Press release

MEPs  in  the  European  Parliament’s  Environment  (ENVI)  Committee  have  today  recognised the importance of effectively compensating indirect carbon costs from the Emissions Trading System. 
 
However,  their  hybrid  compensation  system  ultimately  falls  short  of  the  mark  required to  keep Europe’s non-ferrous metals industry globally competitive. Eurometaux now calls on MEPs to salvage the system in Plenary by removing the requirement for compensation levels to decline over time, and ensuring that the most efficient installations do not face undue carbon costs.
 
Guy Thiran, Eurometaux’s Director General, stated: “We must praise MEPs for kick-starting efforts to improve compensation of ETS indirect carbon costs.  Regretfully, their  hybrid  scheme  still misses essential elements. First, the  centralised EU fund  will only compensate 14% of industry’s total costs; an insufficient baseline for supporting EU best performers. Second, the level of optional Member State compensation would decline over time, putting the most sustainable installations in a precarious position on the global market.
 
We  now  have a simple  call  for  MEPs at  Plenary:  be smart, and  deliver  consistent  indirects compensation without degression”. 
 
Currently, Member  States partially compensate indirect costs   on a voluntary basis. Only nine governments have done so to date.  Eurometaux  has called  for a smart hybrid system to fully compensate indirect costs across Member States, which includes a central EU fund  &  optional Member State top-up to benchmark levels.
 
The hybrid system proposed by MEPs would allocate 3% of total  allowances for central EU compensation of indirect costs,  with an option for Member States to  top-up according to State Aid rules. Crucially, the system requires  that  compensation  limits  decline  over  time.  This  contravenes European Council  Heads  of  State Conclusions from 2014: namely that “the most efficient installations… should not face undue carbon costs”. 
 
Moving away from indirects, Guy Thiran continued: “We are however pleased that MEPs have recognised the specific  carbon  leakage  risk  for  sectors  unable  to  pass-on  their carbon  costs.  Our top-performing  EU installations face unilateral carbon costs which cannot be escaped, disadvantaging them against competitors in other areas of the world.  MEPs are right that this situation should be considered in EU carbon leakage assessments”.
 
Non-ferrous metals, ferro-alloys and silicon sectors are unusual because their product prices are set globally, according to commodity exchanges like the London Metals Exchange or other similar pricing mechanisms. Because metals producers have no control over their product’s sale price, they are unable to pass-on additional local costs to their customers.
 
About Eurometaux
 
Eurometaux is the decisive voice of non-ferrous metals producers and recyclers in Europe. With an annual turnover of €120bn, our members represent an essential industry for European society that businesses in almost every sector depend on. Together, we are leading Europe towards a more circular future through the endlessly recyclable potential of metals.
 
Contact: Chris Heron, Communications & PA Manager – heron@eurometaux.be, +32 (0) 493 18 89 63