Dear Member of the European Parliament,

Subject: EU ETS: uphold pollution pricing and support the Objection to the proposal for the carbon
leakage list for the period 2015 to 2019.

This Wednesday 24th September you will vote in the ENVI Committee on an Objection related to the EU
Emissions Trading System (ETS), notably the list of sectors and subsectors deemed exposed to a risk of carbon
leakage, for the period 2015-2019.

For the reasons below, we recommend Members of the European Parliament to support the objection against
the proposed list of sectors and subsectors deemed exposed to a risk of carbon leakage.

While a recent fact-finding study contracted by the European Commission could not detect evidence for the
occurrence of carbon leakage, the Commissions proposal represents nearly 4 billion CO2 emission allowances to
be allocated for free up to 2020. In monetary terms, the list represents pollution permits worth about 39 billion.
The undersigned NGOs wish to warn you this untargeted hand-out is based on flawed assumptions and, if
unchanged, risks to seriously tarnish the credibility of the EUs climate policies.

Moreover, key findings from the European Commissions own impact assessment accompanying the proposal
were ignored:
To assess more accurately which industrial sectors are at risk of carbon leakage, there is a clear legal
scope to update the 30/ton CO2 price parameter to a more realistic (lower) price[1];
A lower price (the impact assessment recommends 10 to 16.5/ton CO2) would mean fewer sectors
get unjustified free permits, which would raise auctioning revenues of member states by at least 5
billion;
As industry is already sitting on surplus allowances of around 1 billion EUAs, which energy intensive
sectors can use for compliance in the 2013-2020 period, they would have little need to purchase
allowances.
Extensive fact-finding on the cost structure and competitiveness situation of different EU industrial
sectors subject to the EU ETS detected no evidence for the occurrence of carbon leakage as defined by
the ETS Directive. In most cases, due to the accumulated surplus of allowances, ETS has rather been a
benefit than a cost to energy intensive industries.
Our supporters are counting on your responsibility to uphold the EU polluters pay principle and ensure public
resources are spend in a smart way for clean and competitive industries in Europe.

Thank you for your consideration,
With best regards,

Climate Action Network Europe
Julia Michalak
Policy Officer
Mobile: +32 495 77 45 68
julia@climnet.org

Carbon Market Watch
Femke de Jong
Policy Officer
Mobile: +86 182 1084 7905 [in China until 1 Nov 2014]
femke.dejong@carbonmarketwatch.org

WWF European Policy Office
Sam Van den plas
Climate Policy Officer
Mobile: +32 485 95 22 01
svandenplas@wwf.eu

[1] The latest carbon price prediction of Thomson Reuters Point Carbon forecasts an average carbon price of
10 during 2015-2019 even when incorporating a 40% greenhouse gas emission reduction target by 2030 and
the implementation of the ETS Market Stability Reserve as proposed by the Commission.