BRUSSELS, January 29 /PRNewswire/ -- The European aluminium industry is committed to greenhouse gas reduction, having cut PFC emissions in Europe, by 83 per cent, since 1990. The aluminium industry is part of the answer to climate change, through solutions such as lightweighting in transport and energy efficiency of buildings. The sector supports emissions trading, as the preferred measure to address climate change. Primary and secondary aluminium production, however, would be severely impacted if included in the EU ETS, from 2013, unless adequately compensated for the CO2 cost pass through in electricity prices. Such compensation, to preserve our competitiveness, is required until industry in other regions of the world has similar obligations.

"The European aluminium producers see the Commission's proposals on free allocation for direct emissions, for sectors exposed to carbon leakage, as positive but more concrete measures to mitigate the CO2 cost pass through into electricity prices are required to ensure the future of the aluminium industry in Europe," says Christel Bories, Executive Committee Chair of the European Aluminium Association (EAA). "It is absolutely necessary to urgently identify the sectors subject to carbon leakage, in the text of the directive and to confirm adequate compensation measures to allow continued investment by the aluminium industry," says Patrick de Schrynmakers, Secretary General of the EAA.

As determined by several independent studies and by the Commission's own impact assessment, the inclusion of aluminium in the ETS and the impact of the CO2 pass through cost in electricity prices, for indirect emissions, would seriously endanger the competitiveness of the industry. Even a full free allocation for the direct emissions of aluminium processing would be insufficient to preserve the industry, as the impact of indirect emissions can be as much as six times higher. The Commission's proposed revision to the CO2 Emissions Trading Directive provides a process to identify sectors eligible for free allocation of up to 100 per cent for direct emissions but fails to identify the eligible sectors or to specify the compensation mechanisms for the CO2 cost pass through in electricity prices. Postponement of these measures to 2011 would freeze investment decisions. As aluminium is a world commodity, subject to global pricing on the London Metal Exchange, a significant increase in Europe's regional production costs, from the ETS, cannot be passed through to the customer who, if we tried, would simply buy imported aluminium or goods made elsewhere.

As there is no environmental benefit to be gained by including the sector in the ETS, the EAA has argued strongly for the sector's continued exclusion and regrets the Commission's proposal to include both primary and secondary aluminium in the revised ETS, from 2013. On the other hand, through its global approach, the industry has developed a strong benchmarking system and welcomes the Commission's proposal to allocate free allowances on the basis of benchmarking, although it would be helpful if the directive was more precise on how this is to be implemented. Also, the industry is interested in the reference to further consideration for sectors with Global Sector Agreements and would welcome greater clarity on this provision.

Europe's smelters participate in the International Aluminium Institute's Greenhouse Gas Global Sectoral Approach and have outperformed the global industry in terms of climate gas emission reductions and energy efficiency gains. Europe is the world centre for primary aluminium technology and secondary applications' R&D. The European industry will continue to work towards further reduction of GHG emissions and is in the process of setting new stretch targets.

Europe recycles more aluminium than any other region in the world. Recycling aluminium reduces greenhouse gas emissions by about 95 per cent. Europe should recognise the major role recycling plays with positive incentives for growth instead of placing an additional financial and administrative burden on a sector that plays a vital role in improving environmental performance. There is no environmental benefit to include aluminium recycling plants in the ETS.

Spokesperson: Patrick de Schrynmakers, Secretary General of the EAA: Tel: +32(0)2-775-63-51

Spokesperson: Patrick de Schrynmakers, Secretary General of the EAA: Tel: +32(0)2-775-63-51