EU business blasts planned CO2 emissions auction

By Marcin Grajewski

BRUSSELS (Reuters) - Europe's top business lobby attacked on Tuesday European Commission plans for implementing deep cuts in greenhouse gas emissions, saying that auctioning pollution permits could hurt industry in global competition.

In a letter to Commission President Jose Manuel Barroso, BusinessEurope urged the European Union executive to avoid forcing firms to buy carbon dioxide emissions permits, rather than receiving them for free as they do now.

The plan to auction off most, and eventually all, emissions permits is a centerpiece of a major package of energy and climate change proposals to be unveiled next week.

"In the absence of a comprehensive international agreement, auctioning of allowances will harm the competitiveness of European companies, especially in energy-intensive industries," BusinessEurope Secretary-General Philippe de Buck wrote.

"Increasing electricity prices will exacerbate the indirect impact on industries," said de Buck, whose organization says it represents about 20 million European companies.

He demanded "full free allocation" for manufacturing industries until there was a global deal to curb emissions.

Industry sources said oil majors Shell and BP were lobbying to have oil refineries excluded from the sectors that will have to buy emissions permits at auction.

The Commission will present draft legislation on January 23 that aims to improve the greenhouse emissions trading scheme (ETS), Europe's main tool to fight climate change.