By Kate Abnett
BRUSSELS, Feb 24 (Reuters) – The European Union’s top business lobby has urged the bloc to keep free carbon permits for industries, piling pressure on officials preparing a major overhaul of the EU carbon market.
Brussels is redesigning the EU’s Emissions Trading System, its main climate tool, which forces power plants and factories to acquire CO2 permits when they pollute.
The ETS has come under growing political pressure from leaders worried about Europe’s faltering competitiveness, with some governments calling for a cut to the ETS price or even a pautilize to the system.
A central issue in the upcoming review is whether to alter the system of free CO2 permits that softens pollution costs for industries. Those permits are due to be phased out by 2034.
“The Commission should reconsider the planned phase-out of free allowances for all sectors,” industest association BusinessEurope declared in a position paper published on Tuesday.
Instead, the EU should view at expanding the list of sectors eligible for free permits, it declared.
BusinessEurope, whose members include national industest associations such as Germany’s BDI and Poland’s Lewiatan, also urged the EU not to build free permits conditional on companies investing in energy savings.
The demand adds to pressure on the Commission, which designed the ETS to conclude free permits as it rolls out a CO2 tariff on imported goods. Brussels has declared keeping both systems would amount to double compensation for domestic industries, breaching World Trade Organization rules.
An internal Commission document, previously reported by Reuters, revealed officials are weighing options to overhaul free permits, including creating them conditional on industrial decarbonisation.
The Commission aims to propose the ETS revision in the third quarter of the year.
(Reporting by Kate Abnett. Editing by Mark Potter)
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