Ref. Ares(2017)2712620 - 30/05/2017
ALLIANCE OF ENERGY INTENSIVE INDUSTRIES
President of the European Commission
Jean-Claude Juncker
European Commission
200, rue de la Loi
B-1049 Brussels
Brussels 29 June 2015
Dear President Juncker,
The revision of the Emission Trading Scheme (ETS) should take into account the
Commission’s priorities on investment and growth.
We, the signatories of this letter, are several industrial associations representing over 30.000
European companies and 4 million jobs in the EU. Our industries are the core of the EU
economy and the starting point of many essential value chains (cars, fuels, buildings, energy
production, including renewable energies, food and drinks, pharmaceuticals..). Our
industries are also capital-intensive. We are major investors in the EU and a large part of
these investments are geared to energy efficiency, decarbonisation and emission reduction
in full support of the Climate and Energy Package 2030.
We are fully supportive of the priorities that the Commission set in the 2015 Work
Programme. Jobs, growth and investment are indeed also key for us!
In particular, we are strongly convinced that the Investment Plan1 that you designed will be
crucial to give a boost to the EU economy and must be supported.
1 The Investment Plan foresees a smart mobilisation of public and private sources of finance - at least €315
billion over the next three years (2015 - 2017)
ALLIANCE OF ENERGY INTENSIVE INDUSTRIES
As the Investment Plan is about mobilizing private investments in the real economy with a
very high leverage ratio (1 to 15), it is absolutely crucial for the EU to attract long term
investment in energy-intensive industries, which are at the root of the EU economy value-
chain.
Regulatory constraints and burdens, lack of predictability, high energy-related costs and
other factors act as impediments to investment activities in Europe and result in investments
leaking out of the EU.
In this context, we are particularly concerned by the upcoming review of the Emission
Trading Scheme (ETS) Directive which could undermine the Investment Plan if it does not
create sufficient protection for industry against the risk of carbon and investment leakage.
Two important measures could lead to a decreasing level of protection against carbon
leakage: (i) if our sectors are not recognized as being at risk of carbon leakage after 2020.
And, (ii) if the best performers face an arbitrary cut of their carbon leakage protection for
direct and indirect emission costs due to a limit on free allocation.
If any of these two measures were to be decided at EU level under the ETS revision, it would
add costs (hundreds of billions of Euros for the 2020-2030 period) to the sectors concerned.
Costs that our international competitors do not face.
Energy Intensive Industries, unlike the power sector, cannot pass through their carbon costs
to consumers. Therefore, these carbon costs will largely erode profit margins and the ability
for industry to make a return on investment. This would make non-EU countries a more
attractive place to invest and will put a brake on investments in the EU, undermining the
objectives of the Investment Plan.
Contrary to what is sometimes said, the EU ETS can ensure that long-term environmental
goals are achieved while still allowing for industrial growth and industrial investments in the
EU. The European Council conclusions of October 2014 could serve as guidance. There is no
need to penalize the best players in the ETS sectors and to add unilateral costs to them
which will inevitably cause an investment leakage. We are of the opinion that all energy-
intensive industries should be put on the carbon leakage list and that all installations should
receive a free allocation based on ambitious but realistic benchmarks and should benefit
ALLIANCE OF ENERGY INTENSIVE INDUSTRIES
from an off-setting in all member states of the CO2 costs passed through in electricity prices
by the power sector. This is essential to ensure the return on investment needed for the high
leverage effect of the Investment Plan.
We would be happy to discuss with you our detailed recommendations to reconcile
environmental and growth objectives.
Yours sincerely,
CC:
College of Commissioners
The Secretary General