Yahoo News 20 Jan 08;
EU plans to make companies pay for the right to pollute have come under fierce fire from governments and industry, warning they could force business and jobs to leave Europe.
As part of a broad strategy for fighting climate change, the European Commission is to unveil plans on Wednesday to make companies pay for tradeable carbon emissions quotas.
The quotas are the cornerstone of the European Union's emissions trading scheme, under which nearly 12,000 energy-intensive plants can buy or sell emissions credits, which EU governments currently hand out for free.
However, Europe's businesses are up in arms about the plans to make them pay for what are in effect permits to pollute, and European leaders are taking note, fearful of the economic impact.
"The way that it's all planned leaves us no other choice than to leave," the European steelmakers federation Eurofer warned last week.
The secretary general of the BusinessEurope employers association, Philippe de Buck, also wrote to European Commission President Jose Manuel Barroso to lobby against the proposal.
"In the absence of a comprehensive international agreement, auctioning of allowances will harm the competitiveness of European companies, especially in energy-intensive industries," he warned.
Such warnings have not fallen on deaf ears in European capitals.
French President Nicolas Sarkozy has said charging for quotas should be used depending on how much a sector is open to competition from countries that do not impose emissions restrictions.
"If big global economies don't commit to efforts to reduce emissions, European restrictions will push industries to relocate in countries with a lower environmental burden," he said.
Likewise, German Environment Minister Sigmar Gabriel launched a pre-emptive strike on the plans, telling German deputies in Berlin last week that "the European Union cannot ignore the question of how to preserve international competitiveness.
Under the EU's emissions trading schemes, energy intensive plants are assigned emissions quotas, which they can buy on the market if they overshoot their own limit.
Since its debut in 2005, Europe's emissions market -- the first of its kind -- had a financial value last year worth 28 billion euros with 1.6 billion tonnes of carbon dioxide credits changing hands, according to consultants Point Carbon.
In addition to charging companies for the quotas, the Commission wants to broaden the scheme's scope to include other industries, such as the air transport sector, as well as other gases.
Although the scheme is at the heart of the EU's strategy for slashing emissions, it had a rocky first few years because governments issued more quotas to companies than they needed.
As a result, the market price for excess quotas collapsed, along with the incentive to cut emissions, seriously undermining credibility in the programme.
The situation has since improved after the Commission required member states to offer fewer quotas to industry.
