Trialogue in Brussels agrees on tightening of EU emissions trading directive
Risk of carbon leakage grows
The agreement means an overall tightening of the emissions trading system in Europe, says VCI director general Utz Tillmann, and he adds: “The changes will only bring higher costs for the companies – they won't lead to a positive effect for the protection of the environment.” The consequence will be a reduction in the international competitiveness of the energy-intensive chemistry sector in Germany. This makes it all the more important to at least respond to protection from carbon leakage in the national implementation of energy price compensation.
The European Parliament, Council and Commission have achieved an agreement on the reform of the EU emissions trading directive in the sixth trialogue. The changes in the issuing of certificates for the industry, the market stability reserve and the benchmarks will altogether lead to a tightening of the emissions trading directive, according to the German chemical industry association Verband der Chemischen Industrie e. V. (VCI) in Frankfurt. It is said that this will lead to a reduction in the international competitiveness of the energy-intensive chemistry sector in Germany and increase the risk of carbon leakage.
"These changes will only bring higher costs for the companies – they won't lead to a positive effect for the protection of the environment. A different mechanism would be responsible for this", emphasises VCI director-general Utz Tillmann. He points out that the EU emissions trading directive demands a year-for-year reduction in emissions by the companies, irrespective of the price of certification. This effect will now be magnified by the fact that the reform will increase the annual reduction factor for emissions of greenhouse gases in the industry from 2021 onwards from a current 1.7% to 2.2%.
Tillmann explains that energy-intensive companies will have a clear disadvantage in international competition through the reduced number of free certificates. According to the director-general of the VCI, the fact that the Council and Parliament are also tightening the market stability reserve, which was only just recently introduced, will also have a price-increasing effect: certificates are to be revoked from the market and cancelled, which increases their price additionally.
One of the EU Commission's reasons for the reform of the emissions trading directive – to better protect European industry from competitive disadvantage – has not been fulfilled by this agreement, from the perspective of the VCI. This makes it all the more important to at least respond to protection from carbon leakage in the national implementation of energy price compensation. This serves to balance indirect emission trading costs through increased energy costs. Tillmann: "Energy price compensation must definitely not be cut." This is something the EU must consider in the establishment of its environmental aid guidelines.
The VCI represents the politico-economic interests of around 1,700 German chemical companies and German subsidiaries of foreign businesses. For this purpose, the VCI is in contact with politicians, public authorities, other industries, science and media.The VCI stands for over 90 percent of the chemical industry in Germany. In 2016 the German chemical industry realised sales of around 185 billion euros and employed over 447,000 staff.