Released June 20, 2022 | SUGAR LAND
en
Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Proposed changes to Europe's Emissions Trading System (ETS) that would have resulted in a "watered down" version have been rejected by the European Parliament.
The ETS has a major impact on all major industrial sectors. It caps the amount of greenhouse gasses that can be emitted by factories, power plants, oil and gas, refineries, manufacturing and aviation to meet Europe's overall emissions targets. It limits emissions from about 10,000 installations and covers about 43% of the EU's greenhouse gas emissions. The original aim was to increase that to 67%, but a proposal from some right-wing parties sought to reduce it to 61%. This was voted down by 340 members of the European Parliament (MEPs) versus 265 in favor.
The ETS reforms have now been sent back to the Environment Committee, delaying planned changes that will phase out free allocation of emission allowances to the aviation sector, include emissions from the maritime sector, and create a new trading system for buildings and road transport. "As MEPs rejected the report on the revision of the EU Emissions Trading System, three draft laws, part of the Fit For 55 package, are on hold pending political agreement," the European Parliament stated. Draft legislation on the Emissions Trading System (ETS) reform was referred back to committee after Parliament rejected the report by 340 votes to 265, with 34 abstentions."
A number of key industrial sectors have reacted negatively to the delay, including the European Steel Association (EUROFER), which claimed that the outcome was "very disappointing," as it delayed a "much-needed revision of the current proposals." Axel Eggert, director general of EUROFER, said: "We hope that the negotiations will soon be resumed among MEPs and that a solution addressing our concerns will be found, helping us to decarbonise in a sustainable manner and secure that the Carbon Border Adjustment Measure prevents effectively carbon leakage, including for exports."
Prior to the vote, an open letter from 300 of Europe's leading energy-intensive companies, called on the European Parliament for clarity. "We are writing jointly to express our concerns over recent developments for the cornerstone policy of the Emissions Trading System (ETS) and the planned introduction of the Carbon Border Adjustment Mechanism (CBAM). To be clear, we support the objectives of the European Green Deal and our companies are taking concrete actions across several technological pathways to deliver deep emission reductions and climate neutrality by 2050. The sectors within which we operate provide direct employment to around 2.6 million people."
It added: "Our businesses have to plan investments to deliver our energy transition, not only within the Single Market, but also within the global context where Europe's climate ambition and carbon pricing is much stronger than other regions, whose industry we have to compete with. Achieving the EU 2030 and 2050 climate change targets needs unprecedented investments, with a clear business case for every project. To deliver these, companies require a facilitating regulatory framework that provides a high degree of predictability and legal certainty."
In Spain, six major industrial organizations representing refining, chemicals, pharmaceuticals, paper, food, cement and steel called for the ETS changes to take into account the pressures it places on many companies. In a joint letter they wrote: "According to data from the European Union Transaction Registry (EUTL) between 2012 and 2021, 16% of European industrial facilities subject to the Emissions Trading System (ETS) have been forced to close. In this new context, it is essential that the implementation of the Fit for 55 Package and, in particular, the Emissions Trading System (ETS) and the Carbon Border Adjustment Mechanism (CBAM) support investments by companies, with effective measures against carbon leakage, avoiding disproportionate costs, capacity closures and job losses, due to international competition from companies from countries not subject to comparable carbon costs or even no cost at all."
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
The ETS has a major impact on all major industrial sectors. It caps the amount of greenhouse gasses that can be emitted by factories, power plants, oil and gas, refineries, manufacturing and aviation to meet Europe's overall emissions targets. It limits emissions from about 10,000 installations and covers about 43% of the EU's greenhouse gas emissions. The original aim was to increase that to 67%, but a proposal from some right-wing parties sought to reduce it to 61%. This was voted down by 340 members of the European Parliament (MEPs) versus 265 in favor.
The ETS reforms have now been sent back to the Environment Committee, delaying planned changes that will phase out free allocation of emission allowances to the aviation sector, include emissions from the maritime sector, and create a new trading system for buildings and road transport. "As MEPs rejected the report on the revision of the EU Emissions Trading System, three draft laws, part of the Fit For 55 package, are on hold pending political agreement," the European Parliament stated. Draft legislation on the Emissions Trading System (ETS) reform was referred back to committee after Parliament rejected the report by 340 votes to 265, with 34 abstentions."
A number of key industrial sectors have reacted negatively to the delay, including the European Steel Association (EUROFER), which claimed that the outcome was "very disappointing," as it delayed a "much-needed revision of the current proposals." Axel Eggert, director general of EUROFER, said: "We hope that the negotiations will soon be resumed among MEPs and that a solution addressing our concerns will be found, helping us to decarbonise in a sustainable manner and secure that the Carbon Border Adjustment Measure prevents effectively carbon leakage, including for exports."
Prior to the vote, an open letter from 300 of Europe's leading energy-intensive companies, called on the European Parliament for clarity. "We are writing jointly to express our concerns over recent developments for the cornerstone policy of the Emissions Trading System (ETS) and the planned introduction of the Carbon Border Adjustment Mechanism (CBAM). To be clear, we support the objectives of the European Green Deal and our companies are taking concrete actions across several technological pathways to deliver deep emission reductions and climate neutrality by 2050. The sectors within which we operate provide direct employment to around 2.6 million people."
It added: "Our businesses have to plan investments to deliver our energy transition, not only within the Single Market, but also within the global context where Europe's climate ambition and carbon pricing is much stronger than other regions, whose industry we have to compete with. Achieving the EU 2030 and 2050 climate change targets needs unprecedented investments, with a clear business case for every project. To deliver these, companies require a facilitating regulatory framework that provides a high degree of predictability and legal certainty."
In Spain, six major industrial organizations representing refining, chemicals, pharmaceuticals, paper, food, cement and steel called for the ETS changes to take into account the pressures it places on many companies. In a joint letter they wrote: "According to data from the European Union Transaction Registry (EUTL) between 2012 and 2021, 16% of European industrial facilities subject to the Emissions Trading System (ETS) have been forced to close. In this new context, it is essential that the implementation of the Fit for 55 Package and, in particular, the Emissions Trading System (ETS) and the Carbon Border Adjustment Mechanism (CBAM) support investments by companies, with effective measures against carbon leakage, avoiding disproportionate costs, capacity closures and job losses, due to international competition from companies from countries not subject to comparable carbon costs or even no cost at all."
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
