Political fault lines emerge as the European Commission finalises a proposal to overhaul the Emissions Trading System (ETS)
Europe is split into competing camps ahead of the hotly anticipated reform of the EU’s flagship carbon pricing system, where industrial interests meet a real political fear of blowback over high electricity prices.
In 2013, some 2 billion emissions allowances were auctioned, effectively putting a cap on CO2 output from power plants and factory operators that have to buy them. The cap is lowered each year, currently at about 80 million tonnes, and as permits become scarcer, the price has risen to about €80 per tonne, increasing the economic imperative for industry to decarbonise.
But companies have been ringing the alarm bell lately about the higher costs they face vis-à-vis foreign competitors and lobbying for relief in a revision of the scheme, due to be proposed on Friday.
Some countries are also starting to feel the sting on their power bills, particularly Poland, where electricity is largely from coal-fired power plants and carbon costs make up almost a quarter of a typical electricity bill.
