ETS: the crux of the issue regarding reduced safeguards for sectors at risk of relocation

Trade unions are also on alert over the review of the Emissions Trading Scheme (ETS), the European system for trading greenhouse gas emission allowances, which the EU launched in July. The sector is one of the energy-intensive industries on which ETS-related costs therefore weigh particularly heavily: the paper industry, along with the related sectors of graphic design, paper converting, publishing and communications.

“The European Commission’s proposal to revise the ETS system must be amended to ensure that the path towards climate neutrality by 2050 does not result in a loss of competitiveness for European industry and a shift of production to countries with lower environmental standards and CO₂ costs.” This is the position shared by Assocarta, Assografici, SLC-CGIL, Fistel CISL, UILFPC and UGL Chimici. A loss of production inevitably means fewer jobs.

Among the main areas of concern, according to employers’ organisations and trade unions, is the gradual scaling back of protections for sectors exposed to so-called ‘carbon leakage’ (the transfer of emissions elsewhere), such as the paper and processing sectors, including through the new conditions imposed for access to free allowances. The call is therefore to guarantee full protection for all businesses genuinely exposed to the risk of relocation, by freezing the reduction in benchmarks at the levels set for 2025.

Among the other issues on which the paper industry is focusing are the compensation for indirect CO₂ costs demanded of governments, the asymmetry arising from exports to countries without charges equivalent to those under the ETS, and the role of the Market Stability Reserve in stabilising the price of CO₂. The issue of emission allowances and the summer energy price rises remain causes for concern for the paper sector, which is also crucial to the circular economy linked to this material. However, this concern is shared by other industrial sectors. Moreover, the need to amend the mechanism has been highlighted by the Italian government itself.

“The July review,” comments Assovetro chairman Vitaliano Torno, – “whilst it does accommodate some of the requests from Italian and European manufacturing sectors, has been too timid in tackling the key issues of a regulatory framework which, far from being able to achieve its stated objectives, could instead prove to be the breaking point for the entire manufacturing sector. This would also have consequences for the continent’s recycling capacity, a strategic lever for self-sufficiency and environmental protection.”