Energy-intensive industry continues to call for free EU CO2 permits

By Nina Chestney LONDON (Reuters) - A group of 15 European energy-intensive industry associations called in a statement on Tuesday for the European Parliament to reject a tiered approach to handing out free EU carbon permits to industry and to keep full free allocation. Many energy-intensive industries say higher costs for carbon in Europe raises the risk of businesses moving to regions where pollution regulations are less strict. The group includes the European Cement Association, the Confederation of European Paper Industries, the European Precious Metals Federation, the European Copper Institute, the European Chemical Industry Council and the International Zinc Association. In April, Europe's highest court ruled that energy-intensive industries had received too many carbon permits under the EU's Emissions Trading System (ETS), which charges power plants and factories for every tonne of carbon dioxide (CO2) they emit. It also said the European Commission's calculation for handing the free permits out was flawed and gave the EU executive 10 months to review the policy. One Commission proposal has suggested energy-intensive industries are divided into two categories, with some sectors receiving allowances covering 100 percent of their emissions, some 30 percent and the rest nothing. Some lawmakers have called for a more tiered approach, adding more categories for determining allocations of free permits to industries most at risk of relocating in what is known as "carbon leakage". The Commission has resisted such calls, saying the calculations needed to do so were extremely complex. "We urge members of the European Parliament to acknowledge the importance of our sectors for the EU economy, in particular for European jobs, and all their economic value chains by rejecting any tiered approach to free allocation and voting against it," the industry associations statement said. "The tiered approach would reserve free allowances for some sectors at the expense of others... We strongly oppose any tiered approach and continue to advocate for full (100 percent) free allocation up to emissions efficiency benchmark levels for all sectors," it said. The European Parliament's Environment Committee will discuss proposed amendments to a report on ETS reform on Thursday. The energy-intensive industry associations added that they have proposed alternatives to tiering, including reducing the amount of permits which are auctioned by governments. (Editing by William Hardy)