Tuesday, December 02, 2008

Free EU permits for all. Why?

The FT today reports on the EU rethink over pollution permit allocation. In an attempt to prevent a "loss of competitiveness" the rules on permit allocation are being tweaked.

The term "carbon leakage" is an interesting new way of thinking about what would previously have been called the "pollution haven effect".

EU rethink on pollution permits [FT]

European industry appears poised to reap a more generous share of free pollution allowances than first expected after persuading policymakers that proposed legislation would impose steep costs on manufacturers and threaten jobs.

Germany led an effort to ensure that manufacturers - including those in chemicals, glass, steel and cement - receive free allocations if they are forced to compete against companies from non-European Union countries that are not subject to new regulations, according to people familiar with the talks.

Protecting such companies against the threat of so-called carbon leakage, where jobs and production leave Europe for less regulated countries, has emerged as one of the thorniest challenges for negotiators trying to agree an ambitious EU climate package before a summit of EU leaders on December 11.


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