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Published
Sep 21, 2009
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EU plastics, textiles industries win battle on CO2

By
Reuters
Published
Sep 21, 2009

BRUSSELS, Sept 18 (Reuters) - Europe's plastics, textiles, plywood and cast iron makers won a battle on Friday 18 September to be spared the cost of buying permits for their climate warming emissions, European Commission documents showed.



Steel, aluminium, cement and glass had already been identified in earlier EU discussions as the main industries that would get help dealing with the cost of meeting European climate targets.

The European Union agreed last year to cut carbon dioxide emissions to a fifth below 1990 levels by 2020, seeking to lead the world in combating climate change and the floods, drought and famine it is expected to bring.

Its main tool to force industry to cut emissions is the Emissions Trading Scheme (ETS), which forces businesses to buy permits for the carbon dioxide they emit.

But heavy industries are battling hard to avoid paying for permits from 2013, saying the added cost will harm their ability to compete with overseas rivals, for example in India and China.

CARBON LEAKAGE


They argue that if forced to pay, industry would migrate to outside the EU and there would simply be a geographical shift in where carbon is emitted in the production of goods for European consumption -- so-called "carbon leakage".

The same fight is being played out in the United States as it prepares its own emissions scheme.

"The sectors and sub-sectors judged at risk of carbon leakage are estimated to account for...around 77 percent of the total emissions from manufacturing industry," the Commission said in a statement.

A controversial decision over brick and roof tile manufacturers was deferred.

"Because of the weight of the product, and the high transport costs, bricks and roof tiles are not traded over long distances by road, and markets therefore tend to be regional," said a Commission document.

That would suggest the sectors would not need shielding from competition from overseas rivals that do not have to carry the cost of cutting carbon.

But sources close to the negotiations said Italy, Austria and Poland had put heavy pressure on the EU's executive to protect brick and tile makers by giving them free carbon permits, and the decision had been delayed pending further evidence.

The final decision will need approval by the European Parliament and the 27 EU member countries before becoming law.

(Reporting by Pete Harrison; Editing by Dominic Evans)

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