Fortum's views on the post 2020 carbon leakage rules

Fortum’s response (31 July 2014) to the Commission’s stakeholder consultation on Emission Trading System (ETS) post-2020 carbon leakage provisions. The full response is available in the links.

​Industrial customers are a key for the electricity sector and their competitiveness has to be secured. However, experience to date does not reveal clear carbon leakage for the industrial sectors. Therefore, measures to support the industry in the future should not be self-evident, but based on a regular and careful assessment. The risk of carbon leakage should in any case diminish in the future as the climate change mitigation actions are assumed become more and more global.

Predictable and harmonized EU-wide rules are needed for carbon leakage sectors. The criteria should be simplified, not made more complicated.

The free allocation is the most appropriate form of direct support. In fact, free allocation has proved to be resulting in significant over-allocation for the industry in many cases. In the future, a more dynamic allocation based on the real demand should be considered.

Indirect support measures (e.g. compensation of increased energy costs) for the industry should be implemented outside the ETS  in order to avoid watering down the steering effect of ETS. Ideally, such (national) compensation should be based on EU level criteria. Funding for compensation should originate from auctioning revenues or VAT on electricity, as these revenues increase together with rising carbon and electricity prices. An EU level fund similar to NER300 could be one option.

 
 

 

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