Manufacturers cautious on EU ETS intervention
Gareth Stace, Head of Climate and Environmental Policy at EEF, the manufacturers organization has offered his thoughts on the Government’s proposal for a Market Stability Reserve. Stace said:
“The MSR is yet another intervention in a market that is already an artificial construct. Instead of rushing to bring it in early, we need take a step back and review the whole post-2020 ETS. Introducing the MSR early not only puts sectors like steel at unnecessary risk, but also limits our options for a more thorough review of the system.”
The EEF does welcome the Government’s recognition of the need to protect vulnerable industries from carbon leakage. However it is concerned that this incentive does not address demand for a strengthened reserved.
It believes that the Government’s approach will result in higher ETS prices. In turn this could put additional pressure on industries for example, the steel industry, which does not have a great deal of protection from carbon leakage. This is at a time when the current ETS rules incentivize the move of companies to abroad.
The EEF has said that it would be more beneficial to agree the details of the MSR alongside the wider review of the post 2020 ETS rules.