Isramart : EU industry protests against carbon "benchmarks"

Isramart news:
BRUSSELS, Jan 22 (Reuters) - European Union proposals to curb carbon emissions will put EU manufacturers at a disadvantage to less-regulated overseas rivals and must be loosened, industry group BusinessEurope said.

But environmentalists said any such move would hand windfall profits to polluters in sectors such as steel, paper, cement and glass.

The EU aims to cut carbon dioxide emissions to 20 percent below 1990 levels over the next decade. Its main tool for doing that is its Emissions Trading System (ETS), which forces companies to buy permits for each tonne of carbon they emit.

Carbon output is capped, and year by year that level is ratcheted down.

BusinessEurope, which represents 20 million European companies, said the complex process of "benchmarking" under the ETS would cause EU manufacturers excessive pain.

The ETS is expected to force a 21 percent cut in emissions from the industries it covers, many of which have complained the costs will hurt their competitiveness and force them to relocate factories to less regulated regions overseas.

To prevent that happening, some sectors will be given free permits under a revised system from 2013.

But to avoid handing free permits to the biggest polluters, the EU has created a system known as "benchmarking", now the subject of heated debate among technical experts in Brussels with billions of euros at stake.

Benchmarks are set as the average emissions of the most efficient 10 percent of installations in any sector. Only the factories that exceed the benchmarks will receive all their allowances for free.

Less efficient factories will receive only some of their allowances for free, according to a sliding scale.

BusinessEurope, said its first analysis of the proposed benchmarks showed they were as much as 30 percent higher than the average performance of some sectors.

"This would translate into an overall reduction obligation far more stringent than the minus 21 percent... and thus expose large parts of the EU economy to unsustainable and unilateral carbon costs," the group said in a recent position paper.

"Excessively low allocations to sectors will take investment funds away from companies at the very time they are trying to make improvements," it added.

But environmentalists disagree.

"There is no conclusive proof that giving a company allowances for free does anything other than subsidise bottom line profits," said WWF campaigner Sanjeev Kumar.

"Industry has already made significant windfall profits from free allocation in the EU ETS," he added. "Industry must have stringent benchmarks to drive innovation and, at the very least, provide governments with additional income that can be used in the national interest."