January 21, 2008 / 11:00 AM / 12 years ago

EU emissions plan to cost billions -German industry

FRANKFURT, Jan 21 (Reuters) - New financial burdens on German industry arising out of greenhouse gas emissions rules due from Brussels later this week could run to 17 billion euros ($24.92 billion), a German energy users’ lobby said on Monday.

The European Commission is expected to introduce a new system on Wednesday to auction permits to emit carbon dioxide (CO2) after 2012 as part of proposals to protect the climate.

“Should the Commission implement its plans, we calculate that the costs of the CO2 trading scheme would unnecessarily rise 18-fold,” said the Essen-based VIK lobby group, which says it represents 80 percent of German industrial energy consumption.

“Between 2013 and 2020, that would mean around 1 billion euros for actual CO2 reductions and 17 billion of a penalty tax on the amount of CO2 still allowed to be emitted in those years,” it said in a statement.

“The EU Commission unnecessarily threatens Europe’s valuable industrial structure.”

The sums were based on VIK calculations, which assumed an average cost of CO2 emission permits of 30 euros a tonne.

The EU emissions trading scheme, which sets incentives to avoid climate-harming CO2 pollution, started in 2005 when governments initially issued emission permits for free, handing polluters, mainly in the utility sector, windfall profits.

The planned reform is expected eventually to phase in the auctioning of all such emissions permits between 2013 and 2020 to raise the price of pollution, prevent windfall profits and encourage alternative technologies.

Wrangling continues on final details of the package and sources on Sunday said the Commission might allow steel, aluminium and cement makers a less strict regime.

The VIK calculation assumed an annual German emissions cap of 453 million tonnes from 2013 onwards, of which 20 percent, or 90.6 million tonnes, must be cut in the years up to 2020.

Energy consuming industry would be allocated a third of the total — 150 million tonnes per annum — and would be required eventually to save 30 million tonnes annually in the eight years, it said. (Reporting by Vera Eckert, editing by Anthony Barker)

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