Companies that emit a lot of CO2 Will they be able to apply the new Brussels standards without compromising their competitiveness, which is often weaker than that of their Asian competitors? Launched in 2005, the year the Kyoto Protocol on greenhouse gas reduction signed in 1997 entered into force, the European CO emissions market2, known as “ETS” (Emissions Trading System), has become more mature. And more demanding for heavy industry, electricity production and intra-European air transport, which account for 40% of the emissions of the Old Continent.
In 2018, the prospect of a reduction in quotas had boosted the price of CO2, which fluctuated, since the beginning of the decade, between 3 and 8 euros per tonne. It reached 30 euros at the start of 2019. But, since the start of the year, steelmakers, cement manufacturers, chemical groups, paper manufacturers or fertilizer producers, or 12,000 installations entering the ETS system, have doubled to 60 euros per ton this summer. This allowed member states of the European Union (EU) to receive an additional 11 billion euros between January and August 2021, according to the European Commission.
A double-edged hike
The government is powerless to cushion this shock and, beyond that, soaring electricity and gas prices. Barbara Pompili and Agnès Pannier-Runacher, ministers for ecological transition and industry, gathered on Tuesday, October 19, the heads of the “energy-intensive” sectors. In addition to a reduction in the domestic tax on final electricity consumption (TICFE) already recorded (200 million euros planned), the government plans to advance to 2022 (and no longer with a one-year delay) the payment the aid provided for under the indirect carbon cost compensation mechanism. Electro-intensive (aluminum, electrometallurgy, heavy chemicals, etc.) have benefited from this since 2016, in particular to dissuade them from relocating their production to regions of the world where the price of carbon is low or non-existent.
The extra cost of CO2 accounts for only 20% in the current surge in electricity prices, assured the vice-president of the Commission in charge of the climate, Frans Timmermans. But the pressure of climate policies, the end of the free part of the quotas and the reduction in their number will make them more expensive. And this increase is a double-edged sword, underline the industrialists: it is an incentive to invest in new equipment, such as the electric furnaces of steelworks operating with renewable or nuclear electricity, or the capture and storage of CO.2. But an excessive cost of carbon pisses off competitiveness, margins, innovation and, finally, the ability to “green” factories.
You have 34.17% of this article to read. The rest is for subscribers only.