ETS: Striking the right balance between fighting climate change and securing industry competitiveness, growth and jobs in Europe
The European Commission is revising the EU’s Emissions Trading System (ETS) as part of the wider 2030 climate and energy policy framework and as a key instrument to tackle climate change.
While the European copper industry shares the EU’s objective to fight climate change through the ETS, specific actions are needed to sustain competitiveness, growth and jobs. In that respect, the European Commission’s introduction of supporting measures for innovation is strongly welcomed, provided that complementary measures are put in place to create the conditions for these innovations to continue to take place in Europe.
The EU Copper Sector Cut Its Energy Consumption by 60%
Through significant capital investments, the EU copper producing industry has successfully reduced its own CO2 emissions by cutting its unit energy consumption by 60% versus 1990. Today, the industry’s emissions are around 4.5 million tonnes/year, a modest 0.1% of the EU total.
Moreover, the European copper producers are amongst the most resource and energy efficient in the world according to the UNEP International Resource Panel’s “Metal Recycling: Opportunities, Limits, Infrastructure”.
Copper is highly exposed to carbon costs, both direct, e.g. from naturally occurring ores, and those passed through via electricity prices (indirect effects). However, the European copper producers are price-takers and unable to pass on such the CO2 costs. Copper prices are established globally via commodity exchanges such as London Metal Exchange (LME).
In its advocacy efforts, ECI supports the position of Eurometaux, which is to ensure that the ETS continues to protect the competitiveness of the best performers within energy-intensive industries.
Specifically, ECI asks that the following be adequately addressed in the Commission's current work to restructure the ETS after 2020:
- Introduce “price-taker” as a criterion for trade intensity under the Carbon Leakage list (as used in Stae Aid Guidelines)
- Place indirect emissions on an equal footing with direct emissions
- Revise benchmarks in a transparent and tailored manner
- Prevent undue carbon costs for best performers
- Base compensation on actual production levels
- Secure a more harmonised approach to compensation amongst the Member States
While it is challenging to set technically sound and achievable “fallback” benchmarks for the small, heterogeneous copper sector, it is important that they take into account the processing of increasingly complex, naturally occurring copper ores, the miniaturisation of products to support resource efficiency, and the goals of the circular economy (to recover and recycle more end-of-life scrap), all of which require substantially more energy.
The societal contributions of copper products towards achieving the EU's Climate Change and Circular Economy goals, should also merit consideration under ETS.