* Energy intensive opposition blocked carbon market rescue
* Renewable tariffs a political flashpoint in Germany
* Environment lobby says short-term costs an investment
By Barbara Lewis
BRUSSELS, May 9 The European Commission has
asked EU member states to consider removing tariffs on energy
intensive industry, in an action plan drawn up for the steel
industry, EU sources said.
The impact of energy costs on the competitiveness of EU
industry has shot up the political agenda following a shale gas
revolution in the United States, which has delivered a glut of
cheap natural gas to aid the U.S. economy.
A draft action plan drawn up by Commission officials for the
steel industry asks member states to consider measures "such as
the temporary freeze of taxes and levies for a period of two
years", the sources told Reuters on condition of anonymity.
It also suggests they might reduce or exempt energy
intensive industry from "renewable and network levies and
tariffs", they said, adding it found that at national level,
taxes and levies for renewable subsidies could be very high.
The plan is not expected to be made public before June and
the Commission does not comment on unpublished documents.
EU leaders are meanwhile set to debate how to limit the
impact of energy costs at a summit on May 22.
The issue is divisive. Environment campaigners and some in
the European Commission argue strongly that investment now, even
if it pushes up short-term costs, is vital to the long-term
competitiveness of Europe and keeping its industries at the
forefront of innovation.
But the business community has said not enough attention has
been paid to the impact of energy costs on competitiveness.
Debate has been particularly fierce in Germany, ahead of
elections this year, as renewable subsidies have taken the blame
for driving up energy bills.
Arguments from the EU energy intensive industry that it is
disadvantaged compared with the rest of the world, where
environmental standards are lower or energy is cheaper, has
played a big part in blocking a Commission plan to boost the
price of the EU Emissions Trading Scheme (ETS).
The world's biggest carbon market, the ETS is meant to be
central to EU efforts to shift towards a low carbon economy, but
it has collapsed to record low levels under a glut of pollution
permits generated by recession and weak demand.
Energy intensive industry says driving up the ETS would
punish it further in difficult times and could drive it out of
Europe. It is expected to oppose high levels of ambition as the
European Union opens a debate on 2030 climate and energy policy
to follow on from 2020 targets.
The draft document says more advanced industrial processes
and equipment could be financed from cash from auctioning ETS
Attempts to use auction revenues to fund technology to
sequester carbon emissions (carbon capture and storage) failed
last year, but the Commission is trying again.
(Editing by James Jukwey)