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Addressing industrial competitiveness concerns in the 2030 EU Climate and Energy Package

Policy Briefs N°03/2014. Iddri, 2014. 13 p.

Depuis plusieurs semaines qui ont précédé la publication récente par la Commission européenne de sa proposition pour un paquet énergie-climat à l'horizon 2030, l'Iddri a engagé une réflexion sur le contexte et le contenu possible et souhaitable de ce paquet. Dans le cadre de ces travaux, plusieurs Policy Briefs ont été écrits fin 2013-début 2014, sur :

L'Iddri va poursuivre ce travail dans les mois qui viennent : plusieurs publications sont d'ores et déjà planifiées, sur le gaz de schiste dans les politiques climatiques et industrielles européennes, la compatibilité des échelons national et européen dans les stratégies de politiques climatiques, et les questions de financement liées à l'efficacité énergétique.

L'Iddri conduira parallèlement une série de dialogues de haut niveau avec différents gouvernements et acteurs sur l'évolution du paquet 2030.

Points clés [en anglais] :

  • PUTTING THE PROBLEM OF COMPETITIVENESS IN PERSPECTIVE

In the current sombre economic context, the issue of industrial competitiveness has become highly salient. Europe’s industrial challenges need to be understood to be addressed. Europe like other major economies has gone through the resource intensive phase of building its capital stock. At Europe’s level of development, high incomes tend to be spent on high value added services and manufactures. These factors mean that Europe’s industry has been undergoing a long-term transition since the early 70s. In addition, European industry has been hit by a deep cyclical downturn as a result of the crisis. This long-term structural trend and current conjectural situation have nothing to do with energy policy. However, it would be wrong to suggest that energy prices do not play a role for certain industries. For a few highly energy and trade intensive industries, energy prices are a significant factor of comparative advantage.

  • MEASURES TO ADDRESS COMPETITIVENESS IN 2030 CLIMATE AND ENERGY PACKAGE

These industries will need protection in the 2030 climate and energy package, especially if a meaningful CO2 price is to emerge. The current mechanisms to address competitiveness involve a number of drawbacks, notably the distortions and windfall profits that they entail due to variations of production levels from the historical reference used for free allocation. They also do not effectively address electricity intensive industries. Finding a solution to these issues is important for negotiating a meaningful future framework. Options that could be considered include moving to output based allocation for energy intensive, trade exposed industries, or considering temporary opt-outs for these industries. Given the potential risks around temporary opt-outs, output based allocation could be a way forward, combined with a much tighter focus on the energy intensive, trade exposed industries and a harmonized system for dealing with electricity intensive industries.