The Swedish Forest Industries Federation welcomes the Commission’s approach to maintain the EU Emission Trading System as the primary instrument for reducing fossil emissions from electricity generation, industry, aviation and shipping. Meeting the 2040 and 2050 climate targets can only be achieved through reducing radically the use of fossil-based fuels and materials in Europe and globally.
Meeting the climate targets requires protecting EU industry from competition with regions with less ambitious climate measures. To prevent carbon leakage and closure of cleaner facilities, a larger share of the revenues from ETS allowance auctioning must be returned to industry through free allocation and compensation for indirect costs.
European industry has invested and keeps investing heavily in decarbonisation. To avoid penalising global front runners, it is essential the current 95 per cent rule of the ETS is abolished. Instead of introducing new conditionalities, a free allocation of allowances must be based on a technology-neutral approach.
Integrating permanent carbon removals into the ETS through Commission purchases is a welcome addition as it safeguards the integrity of the Emission Trading System. Securing the system even further however does require clarity on the financing beyond 2040.
The Swedish Forest Industries welcomes granting State aid to compensate for indirect costs. For the system to function in a manner that enables trust and investment security, up to 30 percent of the compensation should be provided through EU financing.
"The ETS proposal still penalises those who have taken lead in climate transition. This is due both to the retention of the 95% rule (95% threshold for biomass) and the introduction of additional conditions and conditionality for free allocation. While larger share of the ETS revenues is channelled back to industry, the proposed measures support primarily those who have not yet transitioned and are lagging behind", says Viveka Beckeman, Director-General of the Swedish Forest Industries Federation.
