CPI concerned of UK-France proposal on EU Emissions Trading System
In particular the Paper Industry representatives have raised questions about the joint discussion paper issued by the British and French Governments. The document proposed a tiered free allocation of carbon allowances based on "questionable assessments of the extent to which specific industrial sectors are at competitive risk from carbon costs."
"If instigated, the proposals would fully support a limited number of sectors at the expense of other sectors also exposed to carbon leakage. This is wrong, because protecting auction revenue for Member States should not be a priority, and tiered allocation is unjustified from both an economic and a fairness perspective. It penalises competitive industries investing in low-carbon technologies and hampers innovation too", claims the CPI.
The UK has 29 paper mills currently regulated through the main EU ETS scheme. An additional 11 mills are regulated through the UK opt-out scheme for small emitters, with a further five mills below the production threshold for inclusion within the EU ETS. These 40 EU ETS regulated installations emitted a total of 1.6m tonnes of fossil carbon dioxide in 2015, while a total of 1.24m free allocations were provided – a shortfall of 23%. Of the 29 UK mills currently in the main scheme, 22 were short of allowances in 2015 and seven were long. So more than three-quarters of UK mills already receive less free allocation than their emissions.
The tiered approach on European Union Emissions Trading System (EU ETS) could worsen the crisis experienced by the UK Paper Industry during the last decade.
"In 2005 (the start of EU ETS), the UK had 73 paper mills producing 6m tonnes of paper per year. By 2008 (the start of EU ETS Phase II), the UK had 59 mills producing 5m tonnes of paper. By the end of 2015, the number of mills had fallen to 45, with production down to 4m tonnes of paper", the CPI highlights.
"The UK is now the largest net importer of paper in the world, and more than half the paper collected for recycling in the UK is exported for recycling elsewhere – a massive missed opportunity for job and wealth creation in the UK."