Current-intensive European non-ferrous metals production is one of the economic sectors being particularly hard hit by emissions trading. To prevent industrial production being transferred out of Europe, as well as to avert carbon leakage, European sites should be completely exempted from the indirect CO2 emission allowance costs passed on in electricity prices. The Commission, indeed, has acknowledged the need for such action. Unfortunately, it is still not clear how the relevant provisions, namely Article 10a(6) of Directive 2003/87/EC, will be put into effect. As a result of this continuing uncertainty, the companies concerned have for years been totally deprived of a reference framework for their planning from 2013 to 2020; and it has proved impossible to take investment decisions or conclude longer term supply agreements, either with customers or as regards raw materials (electricity included). That fact alone is jeopardising the companies’ survival. The Commission should therefore clarify the position as quickly as possible regarding the relief arrangements available under ETS 3.

 

When will a framework directive be submitted to enable current-intensive non-ferrous metal producers, which have to bear a particularly heavy burden, to be fully compensated for the indirect CO2 costs passed on in electricity prices, thus giving effect to Article 10a(6) of Directive 2003/87/EC?

 

 

The amended ETS Directive (*) introduced the possibility of free allocation of allowances for direct CO2 emissions to certain sectors, as well as financial compensation for indirect emissions in case of risk of carbon leakage. "Carbon leakage" occurs when global greenhouse gas emissions increase when companies move their production outside the EU – where no CO2 constraints exist – or reduce their share in world production as a result of the existence of CO2 pricing, if they cannot pass on to their customers the increase in electricity costs due to CO2 costs.

 

For indirect emissions costs (i.e. increased electricity costs due to the pass on of CO2 costs in the electricity price) the Directive foresees that Member States may adopt financial measures in favour of sectors determined to be exposed to a significant risk of carbon leakage due to indirect emissions, subject to State aid rules. In that respect, the Commission has acknowledged that from 2013 onwards, when the costs of EU ETS are expected to increase and auctioning will take place to a greater extent, industries exposed to a risk of carbon leakage due only to increased electricity costs (indirect emissions) may be eligible for possible financial support.

 

In order to ensure transparency and legal predictability, the Commission intends to adopt new State Aid Guidelines that will define the compatibility criteria of the aid measures with the internal market. These are envisaged to be adopted, according to the 2011 Commission Work Programme, by the end of the year 2011. This will give Member States the necessary time to put their aid schemes in place, and businesses the predictability to make the necessary investments before 2013, when the new phase of EU ETS will come into force.