Lobbying secures EU subsidy reform and benefits for heavy industry

Brussels, 16 February 2012 - Industry lobbying on EU climate policy looks set to secure further subsidies for energy-intensive industries through the reform of the European Commission's State Aid, according to a new report published today by Corporate Europe Observatory and Carbon Trade Watch [1].

The Commission published new proposals on which sectors can receive State Aid payments to compensate for increased electricity prices resulting from the EU emissions trading system in December 2011. Under the proposals, due to be adopted  by April 2012, the steel sector and aluminium sector could be entitled to state subsidies to cover up to 85% of increased electricity costs, despite the same firms receiving billions of Euros worth of free permits from the same scheme [2].

The UK Government has already said that it will provide £250 million (€300 million) to compensate "electricity-intensive businesses" to help offset the indirect costs resulting from the EU ETS[3].

 
The report reveals that industry lobby groups including BusinessEurope and Eurometeaux are now lobbying to try and increase the subsidies, demanding compensation for 100% of the costs.

Report author Oscar Reyes said:
"Rising electricity prices across Europe have left millions of people facing fuel poverty, but it is heavy industry which is attracting government subsidies. Rather than taking measures to reduce their energy use and climate impact, the steel and aluminium sectors are asking taxpayers to pay their electricity bills."

Lobbying documents show that BusinessEurope first launched a call for a review of the State Aid rules in 2009, with industry lobby groups including the steel makers group Eurofer, EuroChlor (the European federation of European Chlor-Alkili producers) and Eurometaux taking up the fight.

The groups argued that the increasing costs of carbon for electricity generators would push up manufacturing costs - although in reality the carbon price has crashed from a  high of €31 to less than €9 a tonne, and rising gas prices have been blamed for the increased electricity price.

Reyes continued:
"Carbon prices have never been so low, but the whining about ‘carbon leakage’ continues. Instead of crying wolf and blaming climate policy, industry and governments should do more to address the real reasons behind industrial outsourcing, including trade liberalisation and the race to the bottom on labour standards.”

ENDS

Contact: Oscar Reyes, tel: +34 644 139 190 / +44 7739 827208, oereye@gmail.com


Notes:
[1] Paying the Polluters: EU emissions trading and the new corporate electricity subsidies, Corporate Europe Observatory and Carbon Trade Watch, February 2012, see: http://www.corporateeurope.org/sites/default/files/publications/PayingThePolluters.pdf 

[2] See EU Emissions Trading System: failing at the third attempt, Corporate Europe Observatory and Carbon Trade Watch: http://www.corporateeurope.org/news/eu-ets-failing-third-attempt
And Sander de Bruyn et al. (2010) Does the energy intensive industry obtain windfall profits through the EU ETS? Delft: CE Delft, http://www.ce.nl/publicatie/does_the_energy_intensive_industry_obtain_windfall_profits_through_the_eu_ets/1038

[3]The UK Government has made a £250 million (€300 million) commitment to “compensate key electricity-intensive businesses to help offset the indirect cost of the carbon price floor [a national initiative to set a minimum carbon pri