Bid to end free carbon allowances fails

A bid to stop the EU giving away free carbon allowances to some industrial energy users was rejected by Members of the European Parliament (MEPs) yesterday. To prevent “carbon leakage” […]

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By Vicky Ellis

A bid to stop the EU giving away free carbon allowances to some industrial energy users was rejected by Members of the European Parliament (MEPs) yesterday.

To prevent “carbon leakage” – i.e. to stop firms relocating to other countries where emissions aren’t taxed – the European Commission gives permits to emit CO2 to some sectors.

The list of industries to get some or all of their carbon permits for free from 2015-19 includes coal, oil and gas mining firms, sugar makers, salt extractors, leather and fabric manufacturers plus perfume, cement and glass makers.

A common issue raised by some large energy users is the burden of rising energy prices and environmental taxes.

Dutch MEP Bas Eickhout put forward a change to this decision but his proposal was blocked when MEPs on the Environment Committee voted against it.

Eickhout’s complaint hinged on the assumed cost of carbon allowances by the European Commission when judging which industries needed free allowances.

The Dutch MEP said in an interview yesterday: “Sectors that are not at all exposed to the risk of carbon leakage are now receiving free allowances.

“The Commission’s methodology to identify sectors eligible for the allocation of free allowances is based on a carbon price of €30 per allowance.”

The current price of carbon in the Emissions Trading System is a sixth of that, hovering around €5-6 per tonne.

He added: “This price is far too high and puts sectors on the list that do not belong there.”

The MEP argued firms would not move away from the EU if they had to pay for emitting carbon: “A recent study, which was carried out for the Commission, even questions whether carbon leakage exists at all.”