DG CLIMA launched a public consultation seeking to collect views from stakeholders and experts on the structural options and views reflected in the report "The State of the European Carbon Market in 2012". EUROFER welcomes this opportunity to express its opinion on the issue.
EUROFER believes that the Commission’s first Carbon Market Report is getting the wrong end of the stick. The carbon market is functioning and EU ETS operators have integrated carbon costs as a part of their production constraints. The EU mitigation target will be met and today’s low carbon price just means that it will be met at a low cost for the entire economy.
Cost-effectiveness was a key-principle behind the development of market-based instruments under the Kyoto Protocol. In this context, the 6 options for structural measures put forward in the report constitute a U-turn.
Today’s low carbon price is the consequence of a combination of factors:
- an enduring economic crisis
- the emission cap
- incoherent targets (impact of renewables and energy efficiency policy on the energy systems)
- energy efficiency improvements by energy users.
The causes of the currently low carbon price are known. With the Carbon Report, the Commission misses an important opportunity to address them adequately.
EUROFER is opposed to any measure that would either increase the 2020 target and/or boost up carbon and power prices. Given the investments required and the corresponding lead times, the time horizon is too short for such measures to have meaningful effects on the steel sector. On the contrary, the proposals will drive up power prices and ETS compliance costs, consequently weakening the competitive position of the industry.
Climate policies made in isolation from the rest of the world and leading to unilateral cost increases will not put the EU economy on track towards a cost-effective decarbonisation.
Instead the EU should look forward and prepare a fundamental reform of the EU ETS as soon as possible with view to the period after 2020, which is just eight years from today. Until a comprehensive global agreement on climate change ensuring a level playing field is achieved, such a reform needs to be designed so as to protect the manufacturing value chains in Europe. It must rely on measures which are technically feasible and economically viable for the sectors involved.