WRITTEN QUESTION E-1544/03

by Carlos Westendorp y Cabeza (PSE) to the Council

(7 May 2003)

Subject: System for trading greenhouse gas emission allowances

As regards the proposal for a directive establishing a scheme for greenhouse-gas emission allowance trading, its entry into force might have worrying consequences for certain sectors, since it does not take account of important points such as:

1. the fact that companies with production units in various European countries might adopt different or even contradictory provisions;

2. indirect emissions produced outside the premises of a business but caused by the energy sources used in them (such as blast-furnace gases),

3. distortions of competition which may arise between sectors and countries,

4. the transmission of rights corresponding to the transfer of capacity as the result of the closure of plants belonging to one and the same group.

All this seriously restricts the margin for adjusting to the directive for businesses in the steel sector, for specific reasons such as the impossibility of passing on cost increases (a limited number of customers and suppliers of raw materials), the fact that there are only two ways of manufacturing steel (blast furnaces and electric furnaces both directly affected by the Directive) and the recycling of gases from blast furnaces (which reduce CO2 emissions when generating energy, although, paradoxically, the allowances are not granted to industry but to the energy companies).

Will the Council bear these points in mind in order to avoid seriously jeopardising the restructuring of a sector which was finally beginning to be consolidated at Community level?

Reply

(2 October 2003)

The Council adopted its common position on the proposal for a Directive establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC on 18 March 2003. Its provisions strike a balance between the advantages of a Community-wide scheme and the principle, of subsidiarity and proportionality, while contributing to the fulfilment of the joint commitments of the Community and its Member States under the Kyoto Protocol in a cost-effective manner.

Among the key objectives of the Common Position are to ensure the proper functioning of the internal market and to avoid distortions of competition. The Common Position contains such Community-level provisions relating to the allocation of allowances that are necessary to pursue those objectives. Thus, the Member States determine the total quantities of allowances to be allocated, consistently with their respective obligations to reduce greenhouse gas emissions, on the basis of a set of common criteria aiming to ensure a level playing field for all participants in the scheme.

Like the Kyoto Protocol, the Common Position addresses direct emissions.

With regard to transfer of allowances, the Common Position allows transfers between operators within a Member State or between Member States without restrictions beyond those provided for by the Kyoto Protocol and decisions thereunder, and initial allocations are made to operators rather than installations.

In conclusion, the introduction of a EU-wide market for emission allowances should not be considered as an obstacle to the restructuring of the steel sector.