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Glass for Europe Calls for Reform of Carbon Leakage Protection Mechanisms

Glass for Europe issues a position paper on the EU Emissions Trading System post-2020 calling for reform to reduce the risk of carbon leakage in the European flat glass industry.

Glass for Europe, the trade association for Europe’s manufacturers of flat glass, has issued a position paper on the EU Emissions Trading System (EU ETS) post-2020, which calls for reform to reduce the “risk of carbon leakage,” or the possible relocation of these industries outside the EU borders.
The paper states that a 2014 quantitative assessment carried out by the European Commission for establishing the carbon leakage list for the period 2015-2019 had shown a 20 percent increase in the risk of carbon leakage in the flat glass sector compared to the previous assessment done in 2009.  At the same time, the level of protection against risks of carbon leakage is diminishing due to a faster reduction of free allowances allocated to industrial sites according to the rules of phase III of the EU ETS. These two diverging trends are a source of great concern within the flat glass sector, which is why Glass for Europe’s paper is calling for “comprehensive reform of the carbon leakage protection mechanisms under the EU ETS post-2020.”
The paper states, “The EU ETS is a source of costs for the flat glass industry, which has to acquire CO2 allowances for the vast majority of its EU-based plants to operate. So long that emission trading schemes have not become global and therefore that competitors do not bear the same costs, the EU ETS contributes to weakening the competitiveness position of European-based glass industries vis-a-vis third country competitors. As such, it indirectly favors production reduction in the EU and rises in imports into the EU from non EU countries without carbon constraints.”
The report suggests that protection against carbon leakage can be achieved in three ways. First, the current method for assessing industries exposed to carbon leakage could be marginally improved, and second, the level of free allowances allocated to each industrial site should evolve in a realistic way. Third, the paper suggests that the Cross Sectoral Correction Factor (CSCF) should be removed.
“Glass for Europe calls on EU decision-makers to ensure full and effective compensation under the form of free allowances for industries exposed to risks of carbon leakage after 2020. Only thanks to full and effective compensation, will the flat glass industry be able to continue manufacturing in Europe its energy-saving products and will the industry be able to ensure sustained investments in high-tech manufacturing and product innovation.”
Glass for Europe has four members: AGC Glass Europe, NSG Group, Saint-Gobain Glass and Sisecam/Trakya Cam and works in association with Guardian.
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