EU business lobby opposes pollution fees plan

BRUSSELS, Belgium - The EU business lobby urged the European Union Thursday to drop anti-pollution plans that could increase costs for companies, saying the current financial crisis is already badly hurting their competitiveness.

The EU plans would force industries to buy all pollution permits — which are now free — in the future.

The financial turmoil and subsequent economic downturn already force companies into "drastic" cost control and they must be spared the fate having to pay for pollution permits that are now free, BusinessEurope said.

"Being the world's largest exporter, Europe is particularly dependent on internationally competitive companies," said BusinessEurope, which represents 20 million small, medium and large companies.

EU governments and the European Parliament are finalizing legislation to cut greenhouse gas emissions by at least 20 percent from 1990 levels by 2020.

Those rules would expand an existing cap-and-trade program, requiring more companies — and even airlines — to buy permits to pollute.

Today those permits are free, given to companies by governments. Companies — mainly in the energy sector — can sell the permits to others if they release fewer emissions than they are allocated. This allows them to profit by polluting less.

But critics say the system gives money away to companies and that they should buy the permits in the first place.

The EU wants all permits to be auctioned off by 2020. It says this would allow governments to raise up to 50 billion euros ($64 billion) a year — money that could be devoted to developing renewable energy. It admits that auctioning could eventually hike electricity prices by 10 to 15 percent.

BusinessEurope said it supports the EU's climate targets but "the requirement to purchase allowances ... adds to the cost burdens already imposed in meeting the mandatory emission reduction targets," it added.

Auctioning permits will not lead to more emission cuts but "merely shift capital from the private sector to the state" and hinder investments in green and clean technologies, it said. "Therefore investment and production will gradually move out of the EU leading to job losses."

It called for the EU to continue with free permits for all manufacturing industries as long as there is no international agreement placing equivalent emission-cutting burden worldwide.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.