A plea for common sense on the reform of the EU Emissions Trading System

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Negotiations in Brussels on the reform of the EU Emissions Trading System have now reached the trialogue stage, where representatives of EU member states meet MEPs and the European Commission to try and work out a final deal. The outcome will determine the shape of the scheme beyond 2020 and could therefore be very significant if the UK remains a participant (still to be decided) and if efforts among some parties to increase the carbon price are successful.

 

European Parliament and the Council of Ministers made some improvements to the Commission’s original proposal, while also attempting measures to increase the carbon price. Thankfully, Parliament was much more supportive of industry, putting steel in a relatively strong position by settling a dispute over the hot metal benchmark for integrated sites in its favour and freeing up more free allowances for industry generally and a few select sectors in particular, including steel, in case of a shortage. By contrast, the European Council took more drastic measures to remove the scheme’s historic allowance surplus while providing less flexibility in the number that could be provided to industry.

 

At UK Steel we have been very actively involved throughout the discussions, starting before the original proposals were published and speaking with the Commission, numerous MEPs – including the UK MEP leading the negotiations for the Parliament, Ian Duncan – and UK government ministers, diplomats and officials.

 

With the negotiations now in trialogue, we have been contributing to Eurofer’s strategy, feeding information to Ian Duncan’s office and continuing to meet UK government representatives. This week, I also put my name to a Eurofer letter to EU heads of state calling for sensitive treatment of the steel sector during the reforms, alongside 75 other steel company and association CEOs. A shorter version will appear the Financial Times on Monday. Nonetheless, the situation is still very challenging, with several other energy intensive sectors lobbying hard against the elements of the Parliament’s position that are most beneficial to steel.

 

Were the EU ETS directive to be adopted without the improvements requested by the European Parliament, by 2030 there would be a shortage of emissions allowances for EIU’s of around 35%. The steel industry wants to see reform that encourages climate protection while limiting the impact upon our competitiveness, ability to innovate, and protect skills and jobs. Eurofer’s correspondence to EU heads of state is not a begging letter, but a plea for common sense.

 

The next trialogue meetings will be on 30th May and 10th July, however negotiations may continue beyond that point. As always we will update you if a deal is reached. In the meantime UK Steel members should feel free to direct any questions to my colleague, Roz Bulleid (rbulleid@eef.org.uk).

Author

Director, UK Steel

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