EN Official Journal of the European Union CE 33/131

(2004/C 33 E/130)

WRITTEN QUESTION P-1535/03

by Carlos Westendorp y Cabeza (PSE) to the Commission

(30 April 2003)

Subject: System for the trading of greenhouse gas emission allowances

The proposal for a directive establishing a system for the trading of greenhouse gas allowances could, on entry into force of the directive, have very worrying consequences for some industries owing to the fact that no account has been taken of very important factors such as:

1. the existence of companies with production units in several different European countries which could adopt different and even contradictory provisions;

2. the indirect emissions that arise outside a company's facilities but originate from energy sources used in those facilities (e.g. blast furnace gases);

3. the distortions of competition that will arise between industries and between countries;

4. the transfer of allowances corresponding to transfers of capacities resulting from the closure of plants belonging to the same group.

In the case of the iron and steel industry in particular, this limits very seriously the scope that companies have for adapting to the directive, owing to specific characteristics of the sector such as the inability to pass on increases in costs (very limited number of customers and raw materials suppliers), the fact there are only two ways to produce steel (blast furnaces and electric furnaces, both of which are directly affected by the directive) and the recycling of blast furnace gases (which reduces C02 emissions and generates energy without, paradoxically, the corresponding allowances being granted to the industry, but to the energy companies instead).

Will the Commission bear these points in mind in order to avoid jeopardising the restructuring of a sector which is at last managing to consolidate at Community level?

Answer given by Mrs Wallström on behalf of the Commission

(16 June 2003)

The Commission has considered the points raised very carefully when it prepared its proposal to establish a Community-wide scheme for greenhouse gas emissions allowance trading.

Generally the Commission considers it important to distinguish carefully between targets and instruments. Emission allowance trading is the instrument used to contribute to the implementation of the targets accepted by the Community and its Member States in the context of the Kyoto Protocol. The general objective of the proposed Directive is to create a scheme for greenhouse gas emission allowance trading within the Community by establishing a Community framework and ensuring a Community-wide market for emission allowances. Such an instrument is a cornerstone in the Commission's strategy for reaching the Kyoto target in the most cost-effective way. Compared to other instruments, emissions trading is likely to reduce the cost of emission reductions by ensuring that these reductions are made where they are least costly.

Emissions trading as a Community instrument will establish a single market and guarantee a common price for allowances for all participating companies. This will mitigate any potential distortions.

The Community instrument furthermore enables the transfer of allowances within the internal market and does therefore provide to accompany the transfer of production capacities with a corresponding transfer of allowances both within and across Member State borders during a trading period. To what extent a company would temporarily benefit from the closure of an installation depends on the transposition of the Directive into Member State law.

The Directive makes the operator of an installation only accountable for direct emissions released on-site. Activities of operators to indirectly reduce greenhouse gas emissions do not fall under the scope of the Directive.