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Eurofer has joined a number of energy-intensive industry associations to call on the European Parliament to retain free carbon emissions allowances ahead of the upcoming vote on the Emissions Trading Scheme (ETS) and Carbon Border Adjustment Mechanism (CBAM).
In a letter seen by Kallanish, the associations stress the need to set realistic benchmarks related to decarbonisation, in order for them to remain technically and chemically achievable. This should be accompanied by sufficient free allocation levels of ETS allowances.
Carbon prices have jumped by 700% in four years, reaching levels originally predicted only for 2030, the letter continues. As a consequence, a more cautious interaction between ETS free allocations and the implementation of CBAM should be taken into consideration.
“Free allocation should remain conditional to the sole criteria of exposure to risks of carbon leakage. Additional conditionality criteria create a further administrative and financial burden and could create the conditions for the materialisation of the carbon leakage risk that was meant to be avoided by the free allocation,” the letter explains.
“We recommend not to support amendments which do not provide a realistic business case for the successful transition of manufacturing industry in Europe,” the associations add.
The new CBAM system is still being discussed, but proposals have been officially submitted to the EU Parliament. It should become effective from 2023, with a transition period lasting until the end of 2024 – originally planned for 2025. The CBAM proposal includes a phase-out of existing free ETS allocations that could be concluded as early as in 2028.
Emanuele Norsa Italy