UK Steel warns the Commission that tinkering with an established market mechanism will not solve the wider problem, that the EU ETS simply isn't working for energy intensive industries.
UK Steel responded to today's publication of the Commission's Carbon Market Report, by calling for a more fundamental review of EU climate change policy than the Commission's assessment calls for.
Commenting on the EU Report, Ian Rodgers, Director, UK Steel said:
“The answer to a perceived problem with the European carbon market is not to make short term changes with the sole aim of increasing prices. The Commission is now asking the EU ETS to do more than was designed for, which was to reduce EU emissions at least cost. They now want to raise the carbon price to fund low carbon investment beyond what is needed to meet the existing cap.
“This tinkering shows that the Commission has no faith in the market mechanism that it itself created; and it undermines investor confidence in the long term predictability of the EU's emissions cap.
“What is actually needed is fundamental reform of the ETS Directive as soon as possible with a view to creating a fit-for-purpose system for the years after 2020. Policy makers must accept that a ‘one size fits all' approach within EU ETS simply doesn't work. It both slows down innovation and decreases industrial competitiveness. It is time to admit that it doesn't work for energy and trade intensive industries; and the Commission's report accepts that it isn't working for the power sector.
“The proposal will inevitably result in higher electricity prices and other costs across Europe. But the UK steel sector operates in a truly global market, so unilateral cost increases merely damage our competitiveness.
“EU climate change policy must give companies every reason to invest here in the EU, both in efficient processes and also low carbon innovation. This must be done if we are to achieve our ambition to reduce carbon emissions globally. Rather than short term fixes, the EU must look past 2020 to build international consensus on how to achieve global action to deliver significant global reductions in carbon emission.
“The UK and European steel sectors are committed to reducing emissions and is investing in researching and developing the step change technologies that will be needed to delivery significant carbon reductions from the sector.
“Today's announcement only shows to the rest of the world that unilateral, one size fits all climate policy is not the answer.”
UK Steel is the trade association for the UK steel industry. It represents all the country's steelmakers and a large number of downstream steel processers.