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EU Drafts Industry Benchmarks for Falling Supply of CO2 Permits
2010-10-05 16:05:02.194 GMT
By Ewa Krukowska and Mathew Carr
Oct. 5 (Bloomberg) -- The European Commission has prepared
proposed benchmarks designed to assign a dwindling supply of
free emission permits to industries including oil refining and
metals manufacturing.
The commission, the EU regulator, has said its benchmarks
will start in 2013 and will reward the most-efficient European
emitters. The regulation drafted by the climate division will
mark the end of the era when emitters in the European trading
system, the world's largest carbon market, get most of their
allowances for free.
The benchmark for oil refiners was proposed at 0.0295 EU
emission allowances per metric ton, according to a draft
document obtained by Bloomberg News. The benchmarking rules may
be subject to further changes before the commission approves
them and presents the regulation to the EU's 27 member states.
"The commission hasn't finished work on the regulation
yet," EU climate spokeswoman DG climate spokeswoman Maria
Kokkonen said today in Brussels. "It's in internal
consultation."
The commission's refusal to delay phasing out free carbon-
emission allowances until the end of the decade will drive up
costs for refiners already struggling with a slide in crude-
processing profits, the European Petroleum Industry Association,
or Europia, said last month. Europia expects refiners to get 25
percent fewer free permits than emissions.
EU Permits Rise
EU allowances for December 2010 delivery rose as much as
2.1 percent, the most since Sept. 28, to 15.59 euros a metric
ton as of 5 p.m. on London's European Climate Exchange. Permits
are up 24 percent this year as utilities increased purchases
amid signs that the worst recession since World War II is
ending.
The EU agreed last year to give a larger share of a free
permits to 164 manufacturing industries, including most steel-
related assembly. The "carbon leakage" protections included in
phase three of the cap-and-trade program, which runs from 2013
to 2020, are designed to prevent EU manufacturers from fleeing
to less-regulated regions.
The EU is seeking to balance the goal of reducing the
number of allowances in its carbon-trading market with limiting
cost increases for energy-intensive industries. Refiners and
other companies that face higher costs have tried to persuade
the EU to put off plans until later this decade to scale back
free allowances for less-efficient plants.
The 27 EU nations approved plans in 2008 to auction
rather than give away most EU allowances in phase three, which
runs from 2013 to 2020.
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To contact the reporter on this story:
Ewa Krukowska in Warsaw at +32-2-237-4331 or
ekrukowska@bloomberg.net
To contact the editor responsible for this story:
Stephen Voss at +44-20-7073-3520 or
sev@bloomberg.net
