BRUSSELS, Feb. 15 (UPI) -- Europe's steel industry this week stepped up its opposition to a proposal that would take more than 1 billion EU carbon emissions tax credits off the market.
The European Steel Association, or Eurofer, Monday joined a call joined a call from other business interests urging the European Commission to oppose a pending parliamentary bill to "set aside" 1.3 billion allowances under the European Union's emissions trading scheme.
A key European Parliament committee is to vote this month on changes to the EU's Energy Efficiency Directive that call for a "significant" number of ETS allowances to be removed from the market in an effort to prop up their languishing open-market price.
Backers hail it as a way to cope with a saturated market for the credits brought on by the economic slowdown -- prices for ETS allowances have dropped from a peak of $40 per ton in 2008 to $9.25 per ton.
The idea behind the trading scheme is to encourage companies to use energy more efficiently and save money through the installation of new technology to cut carbon emissions.
The steel industry and other pollution-producing businesses have purchased millions of the credits and are decrying moves to manipulate the market as a devaluation of the major investments they have already made.
Eurofer Director General Gordon Moffat said "this confiscation of allowances" to artificially raise the carbon price would only serve to "destroy" the ETS.
Moffat instead indicated support for remarks made last week by European Commissioner for Climate Action Connie Hedegaard, in which she seemed to come out against tinkering with the ETS market.
"We think it's important to have a market-based system," Hedegaard told the EU affairs news portal EurActiv. "None of us should be surprised that, in a market-based system, and with a major crisis in Europe and production coming down, demand and prices are dropping. We would be in for a lot more trouble if we had a politically regulated system."
Moffat agreed, saying in a statement, "We absolutely share (Hedegaard's) view that any manipulation of the EU's emissions trading market would destroy the whole idea of a market-based system.
"The low carbon price -- which is just a snap-shot of price development -- cannot serve as an excuse to introduce a floor price, a set-aside or any annulation of allowances, as currently proposed by some groups in the European Parliament."
The Parliament's environment committee last month backed a non-binding resolution to remove the permits from the market, with vote on the measure in the industry committee set for Feb. 28, the Financial Times reported.
"The commission knows that the emissions trading system is failing to provide a sufficient price mechanism to guide investment decisions," British MEP Chris Davies of the Alliance of Liberals and Democrats for Europe said in introducing the measure. "It must stop delaying and bring forward proposals to address the problems."
Opposition to another form of propping up the price of carbon tax allowances was also being felt in Britain, where a parliamentary committee in January blasted a proposal by British Prime Minister David Cameron to unilaterally set a set floor price for carbon at $25 per ton.
Whitehall contends the move would send a good signal to low-carbon technology investors but the panel of lawmakers feared it would instead harm Britain's international competitiveness in the absence of an EU-wide floor price, The Guardian reported.