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National emissions trading: VIK does not believe carbon leakage protection is guaranteed for companies

The VIK (German Association of Industrial Energy Consumers), Berlin/Germany, has criticised the deferral of the so-called Carbon Leakage Regulation. The regulation is part of the introduction of the national CO2 price by the Fuel Emissions Trading Act (BEHG). In contrast to the regulation, the new carbon price in Germany is effective as of 1st January 2021. VIK Managing Director Christian Seyfert: “This delay is indicative of the hastily adopted national emissions trading. Reliable protection against carbon leakage is extremely important; therefore, an effective regulation is also imperative. The fact that this of all things has now been deferred is incomprehensible, it creates uncertainty and adversely affects the business location of Germany”.

As a result of the current inadequate protection of the German economy against carbon leakage abroad, Seyfert believes that industrial value-added chains and jobs may be threatened. Both the proposed list of sectors eligible to receive aid and the prerequisites for granting aid are also insufficient. The draft of the provisions for the carbon leakage regulation also does not take into consideration the competitive situation within the internal relations of the EU. “This approach is high risk and threatens the affected industries”, says the VIK Managing Director. In addition, the list provided as guidance for the European emissions trading system (EU-ETS) will allow for fewer sectors in the future, meaning that fewer industries would also have the prospect of obtaining aid to offset competitive disadvantages. The amount of the compensation for the affected companies will also be lower in the future. Both factors result in unfair competition to the detriment of German companies.

The linking of grants proposed in the government draft to climate-friendly investments is impractical especially for small and medium-sized companies, as well as the compulsory participation in an environment and energy management system, and represents a disproportionate bureaucratic and financial burden. For the latter, e. g., compulsory participation in an energy efficiency network would be a much more suitable alternative.

Seyfert highlighted: “The compensation for special charges arising purely at national level may not be linked to excessive preconditions for companies in European and international competition and must be comprehensive.” (VIK/Si.)