The European Parliament’s environment committee (ENVI) has voted on the reports for the reform of the Emission Trading Scheme and the Carbon Border Adjustment Mechanism, two of the most important files in the Fit-for-55 package.
The ETS covers more than 11.000 industrial installations in the EU, and with this reform it will expand its scope to include flights leaving the EU, maritime shipping, as well as possibly buildings and road transport.
The CBAM is meant to address the problem of carbon leakage; to avoid the relocation of industries to higher-emitting regions. This task is fulfilled so far by free allowances within the ETS. CBAM instead would place a fee on imported goods, equivalent to the embedded emissions.
BusinessEurope Director General Markus J. Beyrer said, “Unfortunately, the European Parliament’s environment committee in its vote today chose to set unrealistic timetables and add disproportionate regulatory strain on European businesses, which are already battling record high energy prices, supply chain disruptions and inflationary pressures.”
He said: “If today’s positions agreed by the European Parliament’s environment committee became law, European economy as whole would pay a heavy price, as the competitiveness of European industry would be undermined to an unprecedented extent.”
‘By rushing from free allocation of emission allowances within the ETS to CBAM, placing a disproportionate burden on industry, and making the benchmarks unrealistically stringent, producers and employees all along the value chain would suffer. There would likely be a gap in carbon leakage protection, as we would have to rely solely on the CBAM, without a proper testing phase in place.’
“Exports from the sectors covered would not be taken sufficiently into account, threatening to destroy jobs in export-oriented industries and increasing global emissions by decreasing the market share of cleaner European products. The added layer of conditionality for free allowances via the new decarbonisation plans for instance will force companies to disclose granular information at installations level, without clear environmental benefits. Lawmakers in the Parliament’s plenary must urgently rectify the shortcomings in the position of the environment committee.”