European Heavy Industries Warn EU Carbon Rules Risk Accelerating Plant Closures

More than one hundred European companies from energy-intensive sectors have issued a joint letter warning that proposed changes to the EU’s emissions trading rules could speed up factory closures and the relocation of production beyond the bloc’s borders.

Among the signatories are Covestro, Evonik, Wacker Chemie, Voestalpine, and Thyssenkrupp’s steel division. The companies argue that the updated rules would require them to pay significant sums for emissions before they have real opportunities to decarbonize — a burden they say is premature given current energy prices and the state of available infrastructure.

The firms are particularly opposed to a provision that would restrict free carbon allowances to companies committing to invest in decarbonization within Europe. They are calling instead for conditions that are achievable at today’s energy costs and infrastructure levels, along with measures to stimulate demand for clean products. Without those changes, the companies warn, new payment obligations will only accelerate the movement of production outside the EU.

The European Commission presented its draft revision of the emissions trading system in July, which would require energy-intensive sectors to purchase carbon permits. A European Parliament vote on the measure is expected in December.

Separately, the European Council and European Parliament reached a preliminary agreement on October 20 to preserve the Market Stability Reserve cancellation mechanism with a threshold of 700 million allowances. That amendment still requires final approval from EU institutions.

Source: GMK Center