EU lawmakers mulling changes to bloc's CO2 curbs

The European Union's main tool against global warming could be altered to lighten the impact on heavy industry and reduce the chances of the EU tightening its CO2 reduction goals, a document seen by Reuters shows.

As part of its drive to lead the world in fighting climate change, the 27-country EU has committed to cutting carbon dioxide emissions by one fifth by 2020, compared to 1990 levels.

It is also considering increasing the cut to 30 percent if big countries such as China and the United States commit to their own reductions.

But members of the European Parliament's influential industry committee are mulling an amendment that would demand a full impact assessment before cutting beyond 20 percent.

Any such move to extend cuts would also be subjected to full legislative scrutiny by the EU's member states and EU lawmakers before becoming law.

Industry committee members returning to work this week are also considering amendments to alter the EU's flagship Emission Trading Scheme (ETS) so it has less impact on energy-intensive industries such as steel.

The ETS seeks to put a cap on EU emissions by making polluters pay for permits to emit carbon dioxide, the main greenhouse gas blamed for climate change.

The power sector, which now gets most of its permits for free, will have to pay for all of them from 2013, under European Commission proposals.

The power sector passes on the extra cost of carbon emissions permits to consumers, but companies which operate in globally competitive markets such as the steel sector are less able to do that.

EU steelmakers say the current plans could cost the sector more than 50 billion euros ($78 billion) between 2013 and 2020 and put thousands of jobs at risk. The European Commission is considering whether to allow steel and other energy-intensive industry to continue to get free permits from 2013.

The steel industry is particularly worried changes would require steelmakers to buy CO2 emissions permits for electricity that it produces by recycling waste gas from blast furnaces.

But the industry committee's proposed changes would exempt "electricity produced either in connection with industrial heat or from residues from an industrial process including waste gases", the parliamentary document of "compromise amendments" shows.

Steelmakers say the Commission's plan to make power generators buy 100 percent of their emissions allowances at auction from 2013 would particularly raise costs for the most environmentally efficient electric arc furnaces that produce steel from scrap.

But the proposed amendments would allow the Commission to "allocate additional allowances to these installations to take into account the effect of pass through of the cost of allowances in the electricity price."