EU parliament rejects cuts in free carbon allowances

The European Steel Association (EUROFER) has said that it welcomes the European Parliament's decision to reject the European Commission's (EC) proposal to reduce the number of free carbon allowances.
 
According to EUROFER, the European Commission had proposed to amend the Emissions Trading Scheme (ETS) in a way that would have given it the right to withhold allowances, enabling the Commission to withdraw 900 million emissions allowances, thus artificially raising the price for allowances.
 
EUROFER underlined that the fact that Europe will indeed meet its 2020 reduction targets of 21 percent compared to 2005 levels is further proof that the ETS-market is functioning as intended. A higher carbon price simply makes this effort more expensive and more difficult, it said. EUROFER added that reducing the carbon allowances will add to the cost burden and weaken the international competitiveness of the European steel industry.
 
"It is clear now that the Commission should not intervene in a functioning market. The market mechanism of the ETS is the only part of European climate policies that actually works. The fundamental flaw of the system is that high carbon prices result in the deindustrialization of Europe in the long term. There are no technologies allowing industry to meet the target of 80 to 95 per cent in the Commission roadmap for 2050," EUROFER director general Gordon Moffat said.