Study: Emissions trade could cost Finnish industry billions

The proposal by the European Commission for a new system of trade in greenhouse gas emissions could impose an unprecedented economic burden on Finnish industry, says the Pellervo economic research institute PTT.
      Costs for heavy, energy-intensive industry could rise by EUR 1-2 billion in 2020, if companies are forced to buy all of their emission rights on auction. PTT calculates that the added costs for the whole emissions trade period 2013-2020 would be EUR 4.9-9.9 billion.
      PTT says that the additional cost would absorb most or all of the business profit of Finnish industries. In the worst of cases the prerequisites for many sectors would collapse completely.
     
PTT says that the greatest losses would be suffered by the pulp and paper industry, whose costs would rise by EUR 450-950 million. The chemicals industry would incur costs of EUR 210-390 million, and the construction industry would pay out EUR 80-140 million.
      The study concludes that an emissions auction would put the construction industry completely in the red. The ultimate price of the meltdown in profits would be massive losses of jobs.
      PTT director Pasi Holm points out that it is not too late for Finland to influence decisions that are made; under the European Commission's proposal, the EU will decide in 2010 on which branches of industry will be granted special considerations.
      Holm adds that the calculations are based on official statistics and considered assumptions of price developments in electricity and wood.
     
PTT made its calculations on the costs of emissions trade at the request of the Confederation of Finnish Industry (EK). EK director Tellervo Kylä-Harakka-Ruonala finds the figures alarming.
      Kylä-Harakka-Ruonala says that the EU should rapidly make a decision on sectors of industry to be left outside the auction.
      "The EU should, already at this week's summit, make a clear decision that energy-intensive industry, which is involved in international competition, should be excluded from the auctioning of emissions rights", Kylä-Harakka-Ruonala says.
      This week's summit in Brussels is concentrating on climate matters. Finland will be represented by Prime Minister Matti Vanhanen (Centre) and Minister for Foreign Affairs Ilkka Kanerva (Nat. Coalition Party), among others.
     
The European Commission put forward a proposal in January on reforming the emissions trade directive. Commission President Jose Manuel Barroso promised that several sectors of heavy industry will be excluded from the emissions auction. He said that a decision on free emissions will be made by 2010.


Previously in HS International Edition:
  EU energy package to hit consumers in coming years (24.1.2008)
  Poll: Most Finns willing to bear costs of fighting climate change (22.2.2008)
  Climate change brings mild and rainy winter weather - and it is here to stay (18.2.2008)
  COMMENTARY: Emissions trading for dummies (19.1.2008)
  New emission trading period could cost nearly as much as 1990s bank crisis (7.8.2007)