Industry NewsThe European Union (EU) is reportedly due to issue the allocation rules for the next phase of its Emissions Trading Scheme (ETS). The level of the overall cap on emissions should not change from previous estimates. However, the main point of debate will be on who gets free allowances. As well as possibly increasing the costs for businesses in the ETS, the situation could push up energy prices for all users. The new rules could see holders of surplus allowances more likely to hold on to the extra credits to carry over in to the next phase. This would reduce the supply in the open market, pushing up prices.
Leaked information on the draft rules indicates that many industries that got free allocation in the first two phases of the ETS will be forced to pay in phase three. The use of performance standards are thought to be a major component of deciding which sites are eligible for allowances. There have been concerns that the calculation of these standards will leave many businesses facing extra costs. Free allowances are expected to be given to businesses up to a certain benchmark, but this level may be too low, some stakeholders have warned. This is due to them being based on emissions and operations seen during the recession.
When finally released, the rules will be open to consultation among member states. As such, the final rules are not expected to be passed into law before the end of this year.
Industry group BusinessEurope commented to press, "The commission methodology takes in the crisis years, and we don't think that is a fair approach."