Integer Research: Future of Europe´s Energy Intensive Industries Unclear as MEP´s Support EU Climate Change Plan

Energy intensive industries saw their chances of relief from proposals to tighten emissions allowances fading this Tuesday. In a crucial vote by the Environment Committee of the European Parliament, MEPs showed their support for plans to phase in auctioning of all emissions allowances by 2020. The phasing of these allowances will be allocated according to which industries the EU deems more "˜exposed´ to external competition. These will be announced in 2012 but energy intensive industries want to understand the allocations sooner so they can plan their future. Industries affected include aluminium, steel, iron, cement, paper, fertilisers and chemicals.

A report written by Avril Doyle, Rapporteur to the Commission´s Proposal for a Directive on the Review of the EU Emissions Trading Scheme, states that "Energy intensive industries would be required to begin purchasing 15% or their emissions allowances at auction from 2013. This would be gradually increased to 100% by 2020." The results of this vote were not received well by energy intensive industry stakeholders, who are concerned that if EU climate change proposals go ahead as planned, they will be forced to move their production operations outside Europe or even close facilities in Europe to escape the increased carbon costs. This is an action that is commonly being referred to as "˜carbon leakage´ as GHGs are simply being "˜leaked´ elsewhere. For many industries this is not a financially viable option.

While the climate change proposals are generally perceived as necessary to encourage companies to think about their impact, many are calling for free allowances to be available based on a benchmarking system which uses the most energy efficient companies within a sector as a basis for allocation.

Tim Cheyne, Director of Environment and Emissions at Integer says "Energy intensive industries need more certainty over how they will be protected against the competitive threat from regions with less stringent emissions legislation. At a time when the global economy is experiencing hard times it is even more important for energy intensive companies to understand how their business will be impacted by revisions to the emissions trading scheme."

Leading industry executives and senior EU policy makers will come together in November for a high level conference in Brussels which will discuss the concerns surrounding the revisions to the EU ETS and the real impact that these will have on energy intensive companies. The conference will aim to find some positive, sustainable solutions for both industry and the environment at a time where carbon leakage is threatening to change the shape of European industry. For more information visit: www.integer–research.com/EII

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Integer Ltd is an independent research firm and is the leading supplier of specialist financial and market insight, consulting and events for the emissions reduction, steel, fertilisers and wire & cable industries.