EU leaders set to ease climate burden on industry

12 December 2008 08:29  [Source: ICIS news]

PARIS (ICIS news)--European Union leaders were heading for a deal on the EU climate package that will reduce the burden on industry as they began a second day of talks in Brussels on Friday.

Leaders looked set to support proposals by the summit’s chair French president Nicholas Sarkozy that will give eastern European power companies until 2020 to phase in full auctioning – the need to pay for pollution permits through the EU’s Emissions Trading Scheme (ETS).

The European Commission had said full auctioning for the power industry should begin in 2013, but Poland has led strong resistance to this plan saying it would drive up costs for its industry and domestic fuel bills.

The draft agreement also sets out various provisions to calm fears about so-called carbon leakage – the idea that EU industries might move their factories abroad to avoid having to buy emissions allowances.

It would allow such industries to be provided with up to 100% of their allowances free of charge – with the provision that the percentage of free credits that sectors would receive would depend on them employing the best technology available.

Other industrial sectors would only have to buy 20% of their carbon allowances in 2013, when phase III of the ETS begin, rising to 100% in 2025 – the Commission had originally proposed 30% in 2013, with 100% to be reached by 2020.

These measures are still to be approved by EU leaders, but are likely to find favour with the chemical industry, which has long supported a benchmarking approach to pollution permits based on the use of carbon-saving technology rather than auctioning.

Sarkozy said late on Tuesday night that “we’re making progress” and ruled out the idea of the summit running into the weekend.

The climate package will aim to cut EU emissions by 20% compared to 1990 levels, increase the use of renewable energy by 20% and increase energy efficiency by 20% by 2020.

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By: Philippa Jones
+44 20 8652 3214

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