EU Proposes Shield for 175 Industries in Carbon Market

The European Union’s regulator proposed expanding the list of industries in its emissions market that should be protected from relocating to regions without greenhouse-gas curbs.

The reviewed measure, which would cover a total of 175 industries from 2015 to 2019, includes sectors such as production of dietetic food. The European Commission also added manufacturers of non-electric domestic appliances to the list of industries particularly exposed to global competition and liable to move production abroad. The proposal would replace the existing regulation that protects 164 industries from so-called carbon leakage through 2014.

“Installations operating in these sectors and sub-sectors will receive a higher share of greenhouse-gas emission allowances free of charge in 2015 to 2019 than other sectors,” the commission said in a statement on its website.

The measure was sent to the bloc’s 28 member states yesterday and is scheduled to be first discussed by experts from national governments in the EU Climate Change Committee on May 7. After a vote in the committee, planned before the EU summer break that begins in August, the proposal will be sent for a three-month scrutiny to ministers and the European Parliament. The commission wants it to become binding before the end of this year, according to the statement yesterday.

The draft extends the provisions against carbon leakage for industries including manufacturers of steel, lime, cement and refined petroleum products. Producers of aluminum, precious metals, zinc and tin were also kept on the planned list, which according to EU legislation needs to be reviewed every five years. The list currently in force was approved in 2009.

Carbon Price

The commission used data from 2009-2011 and assumed a carbon price of 30 euros a metric ton to assess the risks for the industries, according to the proposal. EU emission permits for December delivery rose 0.6 percent to 5.27 euros at the ICE Futures Europe exchange in London yesterday.

The EU said its assumptions are justified as the price of carbon is expected to be “more strongly driven by mid- and long-term emission reductions” in the future. Earlier this year, the commission proposed to introduce automatic supply curbs in the carbon market and floated a plan to step up greenhouse-gas cuts to 40 percent in 2030. The current target is to reduce discharges by 20 percent in 2020 compared with 1990 levels.

Europe’s emissions trading system imposes pollution limits on about 12,000 installations owned by manufacturers and utilities and is the region’s key tool to reduce greenhouse gases, which scientists blame for global warming. In the current trading phase that started last year, the system is moving toward selling a greater share of emission permits at auctions.

To contact the reporter on this story: Ewa Krukowska in Brussels at ekrukowska@bloomberg.net

To contact the editors responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net Jones Hayden

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