CO2 emissions
Interview: How to charge firms for CO2 emissions without it costing jobs
Some industrial sectors in the EU are given a substantial share of their CO2 emissions allowances for free, as it is feared they would otherwise relocate if they had to pay for them. The Commission has now prepared a list of sectors at risk of relocating on the assumption of a €30 price per allowance. However, the market price today is only €5 and some say that many of the sectors listed could actually afford paying the current market price or even more for allowances without putting jobs at risk in the EU.
Eickhout discussed the situation.
What is wrong with the Commission proposal?
Sectors that are not at all exposed to the risk of carbon leakage are now receiving free allowances.
The Commission’s methodology to identify sectors eligible for the allocation of free allowances is based on a carbon price of €30 per allowance. This price is far too high and puts sectors on the list that do not belong there.
Meanwhile in an impact assessment that was not made public, the Commission uses a price of €16.5. Under this scenario, more sectors will have to buy allowances, member states will earn around €5 billion and several CO2-intensive sectors will have an incentive to innovate.
Is there a risk that some energy-intensive sectors, if removed from this list, might relocate their businesses to other regions?
No. A recent study, which was carried out for the Commission, even questions whether carbon leakage exists at all. Moreover, the aforementioned impact assessment also concludes that some sectors can be safely removed from the list. The list should only contain the sectors that face unfair competition, whereas it currently the list contains 96% of all industries participating in ETS (Emissions Trading System).
How could the EU make companies pay for CO2 emissions while still preserving the jobs in the Union?
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