EID: The EU should provide compensation for extra costs due the MSR

Artificial cost increase does not enhance climate protection

The Energy-Intensive Industries in Germany (EID) criticize the “market stability reserve” (MSR) as adopted by the plenary of the Euopean Parliament today: The measure does not hep cut emissions, but it merely leads to a cost increace within the emission trading system. Without compensation measures the energy-intensive industries in Germany alone will be faced with extra costs of up to 5 billion euros per annum. This means a significant disadvantage for EID companies in international competition.

From the viewpoint of the Energy-Intensive Industries in Germany (EID), the European Parliament has set the wrong course with its decision for a “market stability reserve” (MSR). According to the EID, this measure – as adopted today by the EP plenary – does not help cut emissions; it merely leads to a politically demanded cost increase in the system, said EID spokes¬man Utz Tillmann. With the MSR the European Union wants to steer the amounts of CO2 allowances in the market.

Tillmann (who is also the director-general of the German chemical industry association VCI) states: “The MSR constitutes an artificial cost increase which does not contribute to climate protection, as the reduction targets for EU emission trading are set. Its guiding idea was and remains to implement measures for preventing CO2 emissions at the most favourable cost possible. With the MSR, Brussels now introduces the principle of ‘Only expensive climate protection is good climate protection’, mostly with energy-intensive industries paying the price.” Tillmann explains that without compensation measures the energy-intensive industries in Germany alone will be faced with extra costs of up to 5 billion euros per annum. This means a significant disadvantage for EID companies in international competition.

In view of the above-mentioned extra costs due to the MSR, EID spokesman Hans Jürgen Kerkhoff (president of the German Steel Federation) warns against much uncertainty and a lower readiness to invest among European industry. He is calling for an urgent adaptation of emission trading, in order to avert such negative consequences. Kerkhoff: “Europe does not need an emission trading which one-sidedly causes extra costs for internationally competing industries and brings losses in jobs and investments. We need a sufficient allocation of free allowances, based on economically and technologically feasible benchmarks.” The EID spokesmen also advocate a full compensation of electricity price increases attributable to emission trading.