Steelmakers urge EU to improve emissions proposal

BRUSSELS (Reuters) - Two major European steel industry bodies urged the EU on Thursday to improve its proposal on revising the bloc’s emissions trading system, saying it could damage the European industry’s competitiveness.

The European Commission is reviewing its Emission Trading Scheme (ETS), which caps how much carbon dioxide industries may emit, establishes a system for trading in emissions permits and is the bloc’s flagship weapon for fighting climate change.

The European Metalworkers’ Federation and the European Confederation of Iron and Steel Industries said the revision proposal should be improved to ensure a “fair balance” between climate change measures and industrial competitiveness.

“Only a balanced recognition of social, economic and environmental aspects can secure a high level of employment, high social standards and the well-being of European citizens,” they said in a joint statement.

They said the current proposal would lead to a reduction of CO2 emissions by current ETS sectors of 35 to 40 percent in 2020 compared to 1990 levels.

“This alone is almost unachievable, it does not reward any early action which has been taken prior to 2005, and it leads to billions in additional costs for our industries in the coming years,” the statement said.

Sectors at risk of carbon leakage should receive 100 percent free allocation until there is an international deal providing a level playing field for competitors, the industry bodies said.

They said auctioning should be phased in at a much slower pace for sectors not determined to be at risk of carbon leakage, or alternatively, all manufacturing industries should be exempt from auctioning until there is an international agreement.

Under present proposals, power generators would be forced to buy permits for all their emissions at auction from 2013, and a wide range of industries would have to do so by 2020.

The European Commission is considering whether to allow steel and other energy-intensive industries to continue to get some or all of their permits free, to safeguard their global competitiveness against rivals based in less regulated areas.

A preliminary Commission report earlier this month named primary aluminum, hot rolled steel and slabs produced in basic oxygen furnaces and clinker as industries that would be strongly affected by such competition.

Reporting by Krisztina Than; editing by Dale Hudson