CEMBUREAU discusses EU ETS with Korea

On 24 October 2011, CEMBUREAU met with a delegation of governmental officials and journalists from Korea in order to discuss the impact of the EU’s Emission Trading Scheme (ETSⁱ) on the European cement industry. In July 2011, the Korean Government submitted a bill to Parliament which includes plans for the establishment of a cap and trade emissions trading scheme as of 1 January 2015. During the discussion, CEMBUREAU took the opportunity of highlighting a number of issues, including the fact that industry needs regulatory certainty. In addition, the Association highlighted that the ETS fails to address the issue of capacity rationalisation in the context of allocation rules for 2013-2020. When capacity rationalisation takes place, the transfer of allowances between two installations reducing total emissions, even within the existing capacity of the rationalised installation, clearly contributes to achieve the CO₂ reduction objective. CEMBUREAU believes that Member States should therefore have the flexibility to consider capacity rationalisation when determining the allocation of allowances, provided that the environmental benefit can be demonstrated.

On the issue of over-allocation of allowances, CEMBUREAU indicated that over-allocation in the cement industry is the result of the impact of the economic recession, with production falling within the context of a cap & trade system based on ex ante allocation with no ex post control. The Association indicated that it is on record for having drawn the attention of the European Commission, in writing, of this potential problem during the very early days of the first Emissions Trading Directive. CEMBUREAU always insisted that ex-post control was the only way to avoid over-allocation as well as under-allocation and that this was allowed by the original, as well as the revised, Emission Trading Directive, a point that was confirmed later on by the European Court of Justice (Case T-374/04).

In relation to the ongoing discussions at EU level on the “setting aside” of allowances in the EU ETS, CEMBUREAU stressed that it is not in favour of this proposal as it would mean tampering with the market, creating uncertainty for business. The Association also stressed the huge impact which the ETS has had on power prices, and thus additional costs to EU industry in terms of higher electricity prices.