Stimulating the economy with a wrecking ball

EU Observer today reported on the impact that the EUnions madcap scheme to combat 'climate change' will have on the industry:
A plan to tighten the European Union's greenhouse gas emissions trading scheme is likely to cause the loss of some heavy industries to global competition, EU officials have acknowledged ahead of the publication of the new legislation.

The new rules on the bloc's Emissions Trading System (ETS) are expected as part of a post-2012 climate change policy package due to be unveiled by the European Commission on 23 January.

Brussels is planning to set an EU-wide cap on emissions from 2013 and change the current practice whereby member states propose their own quotas and the commission assesses them, according to a report in the Financial Times.
In laymens terms this means that the EUnion is on the road to wrest control over climate-saving measures from member countries and usurp the power to dictate emission quota's to the industry directly.

But that is not all. The EUnion will also do away with the current system of allocating free emission quota's to protected sectors like the energy sector or refineries.
The revised scheme should also eliminate free emissions allocations for the energy sector and refineries and instead put to auction "at least two-thirds of the total quantity of allowances in 2013", compared to the current level of less than 10 percent.

"After 2020, almost 100 percent of permits will be auctioned," EU environment commissioner Stavros Dimas said, Reuters reports.
This is particularly cynical. As the whole climate change hype seems to have jumped the shark in the worlds view, the EUnion puts forth a measure that is justified by the same hype, but is actually designed to put money in the Brussels coffers. Or where else does one think the revenues of the 'auction' will end up? And we will all be made to pay for EUnions gluttony.
According to official documents quoted by Financial Times, commission experts admit that the changes will particularly affect Europe's aluminium producers as they are least likely to manage to absorb the increased costs resulting from the proposals.

For chemical-, steel- and cement-makers the main impact would be that they would have to raise prices by between 5 and 48 percent, which would weaken their competitive position against firms from economic superpowers such as the US or China.
What this means in economic terms is saved for the last paragraph:
It is estimated that Europe's gross domestic product would fall by 0.1 percent as a result of the proposed changes but the jobs lost in the affected industries would be offset by new opportunities in a low-carbon economy.
What those new opportunities are is as of yet that much pie in the sky, one fears. And more likely then not a very meager excuse to make the 0.1 percent drop in the GDP. However, with a projected growth of around 2 percent annually, such a drop would mean a dent in economic growth of more then 2 tenths of a percentage point, bringing growth back to 1.8% annually. And that is not discounting the likely effects of increased fuel and food prices we are to expect in the near future. Nor does it incorporate the likely effects of the sub-prime mortgage crisis looming large in the US, and by extension: the world.

Moreover, heavy industry has seen a concentration of production power into an ever diminishing number of transnationally operating hands. Especially the fact that they *are* transnational will in all likelihood mean that the heavy industry still residing in the EUnion will partly be moved to places where the 'climate' (pun intended) is a little more hospitable to businesses actually wanting to do business (and not function as the teat on which the Brussels establishment gorges itself on). One wonders if this outsourcing is accounted for in the estimated drop in GDP.

And for what? In essence the 'auctions' are a form of carbon tax levied by the EUnion on the industry, at a rate of 5 to 48 percentage. But not only that. The EUnion also usurps reserves the right to hand out free emission permits to protect certain industries (and equally likely: certain industry partners within certain industries).
Austrian daily Der Standard reported that the commission's latest draft proposal includes a clause proposed by industry commissioner Gunter Verheugen saying Europe's energy intensive industries should get some permits for free, if the EU's main trading partners do not take concrete steps to fight climate change.
In its simplest terms this means that the EUnion gets to decide who it will favor with free permits and who will have to face the full blast of righteous enviro-anger of our Brussels overlords. Gone are the ideals of a free market (assuming those ideals were professed with any sincerity to begin with). The whole economy, starting with the heavy industries, will come into the tight grip of unelected Brussels functionaries. All under the guise of common good that is 'combating climate change'. It is all about the power. And if we have to wreck the economy in 27 member states to get it, then wreck it we shall!

[UPDATE001 Teusday 15-01] Richard North, who has a far netter grasp of things EU and economical than yours truly, weighs in on the matter: A "vindictive" campaign. A snippet (emphasis mine - KV):
Interestingly, the European steel industry is the most efficient in the world, using half as much energy as China to produce a ton of steel. However, an expected carbon price of €30 a tonne from 2013 would add €55, or about 10 percent, to steel prices, before the cost of higher power bills.

And, just to show how off the rails Gordon Brown really is, some 370,000 jobs are under threat, many in areas of high unemployment such as southern Italy and former communist countries. Furthermore, if the industries do move offshore, and there is every likelihood that they will, emission levels will undoubtedly increase as the plants are moved to areas of lighter regulation. "That does nothing to combat global warming," says Moffat.

Of course, the EU does not give a damn. As long as it can indulge in its gesture politics, whether it is REACH or any number of damaging laws which are crucifying industry, it will gaily shut down productive firms without a second thought. But, when the lights go out all over Europe, I suspect we will still be hearing little Gordon blathering that the EU is "the key" to business success.

He needs locking up.
And not only he, I would venture.

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