The EU took the first big, bold steps to reduce CO2 emissions, and has reaped some impressive rewards. Europe’s historic achievement, however, has come at a big cost to the metals industry.
The upcoming United Nations climate conference in Paris (COP 21) is an opportunity for EU leaders to rectify these wrongs and create a level playing field for European manufacturers - at the same time as encouraging decisive global action to tackle climate change.
What went wrong?
In 2005, the EU established the European Emissions Trading System (EU-ETS), requiring industry to buy carbon certificates to reduce their emissions. The programme played a key role in enabling the EU to meet its 2020 targets for CO2 five years early in 2015.
We join policymakers in celebrating this major achievement and are proud that today, European industry has a CO2 footprint that in most cases is several times better than our foreign competitors.
Yet, without a global climate agreement, this historic achievement had its costs. Unlike our foreign competitors, European industry has had to make expensive investments in new technology and change its protocols in response to European climate and environmental policy. Because metals are globally priced commodities, we couldn’t pass these costs onto consumers and remain competitive.
The EU recognised this challenge to European industrial competitiveness, creating a ‘carbon leakage’ protection mechanism to offset our costs. Although the EU didn’t want to see European industry move abroad to benefit from more lenient carbon policies, that’s unfortunately exactly what happened.
As one example, increasing regulatory costs resulted in the curtailment or closure of about 40 per cent of primary aluminium production in Europe since 2007, leaving 1 in 6 employees out of work. Sadly today, many businesses in Europe are now dependent on aluminium and other metal imports when we are perfectly capable of making them here.
Time for a level playing field
Europe’s share of CO2 emissions is likely to further decline from 10 to 6 per cent by 2050, but for the wrong reasons. It won’t be because of our advanced technology, but rather because European industry will continue moving abroad to places where industrial policy is more favourable. This needs to change.
COP 21 is an opportunity for governments to create climate change policy that works for society, the environment and industry.
That’s why Europe’s metals industry supports a globally-binding agreement from COP 21, which not only enables effective international action against climate change, but also establishes a level playing field where industries have to play by the same rules around the world.
Jernej Vernik is Energy and Climate Change Manager at Eurometaux, and will be following COP 21 closely