Published: Thu, 04 August 2016
MEP for Ireland South and leader of Fine Gael in the European Parliament, Seán Kelly, has moved to amend an important European Commission legislative proposal, saying that the proposal in its current form could “negatively affect economic growth and even prevent companies from expanding”.
Mr Kelly was commenting on the Commission’s legislative proposal to revise the EU Emissions Trading System (ETS) and enhance the system’s ability to drive cost-effective reduction of carbon emissions and bring low-carbon investments to Europe.
The ETS works by adding costs to carbon emissions through the allocation and auction of allowances that allow a company to emit one tonne of CO2, with these allowances being bought and sold on a carbon market between companies. The idea is that the amount of allowances is gradually reduced, lowering carbon emissions from EU industry over time.
Mr. Kelly, Ireland’s only member of the Parliament’s committee on Industry, Research and Energy (ITRE), has taken issue with the method of calculating allowances based on 5-year-old historical production data, claiming this period is too long to be accurate.
“Five years is a long time in business; much can change over that period and industrial production volumes can vary greatly. By only calculating the allocations every five years, we would essentially reduce the incentives that companies have to grow.
“Companies that expand their production between the re-calculation points would need to purchase additional allowances – this puts additional costs onto companies that grow and the Commission will only adjust allocations in case where there is significant growth above a threshold.
“This means that smaller expansion year on year, as is often the case, could prove costly for companies. For me, this runs counter to our goals of bringing about economic growth in Ireland.
“It would be a far better idea to review production every two years rather than every five as the Commission has proposed. This would lead to the system being more accurate and dynamic, ensure that we are not over-allocating in some places and under-allocating in others, and, crucially, make sure that we are not effectively punishing companies that grow.”
Kelly’s amendment as tabled would reduce the calculation period from five years to two years and limit the need for any corrections to be made to the free allocations that are given to companies. The Fine Gael MEP says that he has full support from industry on his proposal and that the only stumbling block could be the additional burden on Member States’ administrative processes.
“Yearly production data is something that companies have already – there is no additional burden on business and it is simply a matter of submitting the projections that they have year-on-year anyway. I call on the European Council not to block this on the basis that it would increase the burden on public administration – the fact is that shortening the period down to two years would encourage companies to grow, add value to the economy and create employment.
“These positives far outweigh the need for additional resources to be allocated towards public administration”, he concluded.