EU energy plans ‘put jobs at risk’

The European Union’s efforts to go green risk job losses, business and unions have claimed in the run-up to the publication of a package of draft energy laws.

The European Commission will next week (23 January) present a series of proposals on energy and climate change intended to put the EU on a path to cutting carbon dioxide (CO2) emissions by at least 20% by 2020 compared to 1990 levels. European business and union leaders are unhappy about a draft proposal for revision of the emissions trading scheme.

A recent draft states that auctioning will be the general principle for allocating permits to pollute to industry, with some energy-intensive industries receiving a proportion of free allocations that is gradually reduced. Commission sources suggest that there is unlikely to be a retreat from partial free allocation.

On Tuesday (15 January) a coalition of 11 business lobby groups, including the European Cement Association and the European Confederation of Iron and Steel Industries, said that the proposed measures "would cripple European industry through direct and indirect costs".

Marco Mensink, energy and environment director at the Confederation of European Paper Industries (CEPI), said: "We want to see free allocations because our global competitors don’t have this burden." CEPI claims that full auctioning could cost the paper industry €1 billion every year and would displace investment from Europe to cheaper producers in China and South America.

Business groups are also concerned about rising energy prices as a result of the emissions trading scheme. Folker Franz, a senior adviser at BusinessEurope, the employers’ federation, said: "The electricity price is one of the major issues in the whole energy and climate debate. Already energy prices are several times higher than in the US and China."

The European Trade Union Confederation (ETUC) said that the current plans were unacceptable and called on the Commission to propose a tax on carbon-heavy imports. John Monks, the ETUC general secretary, said: "What we don’t want is that companies fire people in Europe and re-locate to cheaper, dirtier locations." Acknowledging that a carbon tax would be criticised as protectionist, Monks said that it would force other countries to adopt European standards.

The Commission has calculated that the cost of its energy package will be around 0.5-0.6% of a member state’s annual gross domestic product (GDP). In 2006, Nicholas Stern, a British economist who wrote a report on the economics of climate change, said that the cost of stabilising carbon emissions would be 1% of GDP.

A Commission source said: "We are not going to hide from the fact that there is a cost…but it’s actually a fabulous business opportunity."

The Commission is still debating the idea of a carbon tax, although some directorate-generals have concerns as to whether it would be compatible with World Trade Organization rules.

Individual targets for member states on reducing CO2 emissions by 2020 are still under discussion. It is expected that the Commission’s proposed numbers will not be agreed until 23 January by commissioners themselves.

Several member states are fighting against the Commission’s proposals for targets. France wants the contribution of its nuclear industry to be taken into account and Germany has fought unsuccessfully to be exempt from a proposal on trading renewable energy obligations. A Commission spokesman said: "We are not in a bartering situation, because there is a methodology behind the package."

The European Union’s efforts to go green risk job losses, business and unions have claimed in the run-up to the publication of a package of draft energy laws.