Published: Wed, 01 March 2017
MEP for Ireland South and Leader of Fine Gael in the European Parliament, Seán Kelly, has welcomed the Parliament’s adoption of its final position on the Emissions Trading System (EU ETS) Directive review. Kelly noted that the final Parliament position was strong and balanced, and should stimulate the investments to allow for cost effective emissions reduction in the industrial sector.
The EU ETS is a cap and trade system whereby overall emissions in large scale industrial plants are capped, while within the cap companies receive or buy emission allowances which they can trade with one another as needed. The system operates in 31 countries including Ireland, covering 11,000 installations and 45% of the EU’s greenhouse gas emissions.
Certain sectors deemed exposed to carbon leakage, largely energy intensive sectors operating in commodity markets, are given free allocation to prevent loss of industry from Europe. Mr. Kelly has pushed for a fair system of assessment for eligibility for this free allocation so sectors and subsectors are assessed accurately and comprehensively, and Parliament has now included his provisions in the final adopted text.
“I strongly welcome that we have arrived at a balanced approach in these discussions that have been ongoing for almost a year – it is absolutely vital that the EU maintains leadership on climate action on the one hand, but on the other hand we must be careful to ensure that emissions are not displaced to less stringent regulatory systems, which could lead to an increase in global emissions, missing the Paris targets in the process.”
Mr. Kelly’s proposals that have been adopted include the lowering of the threshold for sectors and subsectors to be eligible to get a qualitative assessment on their level of exposure to carbon leakage, and also the opening up of the carbon leakage sectors to the sub-sector and product statistical disaggregation level (Prodcom), compared to the Commission proposal which limited this to the sector level (NACE-4).
“I am pleased that my provisions around the carbon leakage assessment have been included in the final text as these will ensure that we don’t leave certain subsectors – such as those in the dairy industry – needlessly exposed.
“I strongly welcome that the Parliament has adopted a text that allows for the assessment be done at sub-sector or product level, rather than the more homogenous sector level.
“Assessing all products in the dairy sector for example, such as skimmed milk powder, whole milk powder, whey, caseins and others, as one homogenous group wouldn’t account for important differences between the different products and subsectors, and could lead to sectors that would otherwise qualify for free allocation missing out.
“It shouldn’t be underestimated how important these provisions are and it should be quite clearly understood – we are not looking for any additional protection for these sectors, we are merely ensuring the system is accurate, that it protects those who ought to be protected, and doesn’t protect those who ought not to be – sectors shouldn’t get a free pass, but they must be allowed to sit the exam.
“The Parliament’s text would ensure that subsector differences are taken into account and assessed and not carelessly exposed due to inadequate administrative processes. A more accurate system is a better system and will prevent jobs losses in Europe – not to mention preventing the loss of industries that are important parts of the agri-food value chain.”
Mr. Kelly stressed the importance of the EU ETS in the overall challenge to lower emissions:
“The ETS is a crucial part of the EU’s plans to reduce Greenhouse Gas (GHG) emissions by 40% by 2030 compared to 1990. This is what we pledged in December 2015 as our part of the COP21 Agreement, and is in line with the ultimate goal of limiting global average temperature increases to an absolute maximum of 2oC. I hope that Council will be able to adopt these important provisions that Parliament has endorsed.”