Responding to the European Commission’s publication of its proposals for reform of the EU emissions trading system today, Gareth Stace, Director of UK Steel, said:
“The European Commission has proposed another flawed solution to the competitiveness issues the EU Emissions Trading System (ETS) causes for UK steel. This smacks of two steps forward and one step back.
“UK steel plants are trying to compete internationally against companies facing none of the same compliance costs. The ETS’s carbon leakage measures are meant to address this by ensuring the best-performing plants in the EU are given all the ETS allowances they need for free - but neither the current measures, nor the Commission’s new proposals, live up to this promise.
“At this stage it is impossible to know what the exact effect on the UK steel sector could be. However, the Commission’s proposal has failed to address the main problem with the existing system: the arbitrary cap on the number of allowances that can be given to industry.
“Also disappointing are the automatic reductions to best-performance benchmarks, which make no allowance for the long investment cycles in an industry like steel.
“We will be asking the UK Government and MEPs to press for substantial reforms, including removal of the cap on free allocation to industry, better reflection of changes in production levels to help growing companies and a more targeted list of sectors eligible to free allocation.”
For more detail of the changes needed please see UK Steel’s recent position paper, published in conjunction with Community, the largest trade union for the steel sector.