Lithuanian Confederation of Industrialists (LPK), the country’s leading business organization, shared its views on the European Commission’s proposed revision of the EU Emissions Trading System (EU ETS) and the Regulation of the Carbon Border Adjustment Mechanism (CBAM) as part of the Fit for 55 legislative package with EU Parliament members.

LPK agrees with the proposal to implement the CBAM in its full extent earlier: the sooner it becomes fully operational, the earlier it will be possible to assess its effectiveness, identify its shortcomings and to remedy them. LPK also supports the proposals of ‘CBAM authority’, inclusion of indirect emissions occurring in the production of the used electricity, as well as the no-exemption rule (LPK strongly advocates that the CBAM must apply equally and without exceptions to all imports from all third countries, regardless of their origin).

Finally, we concur with the efforts to identify fully WTO-compliant export support measures to the CBAM sectors to strengthen the EU’s export competitiveness. At the same time, however, LPK is strongly against the proposed rapid phase-out of free EU ETS allowances in sectors covered by the CBAM: we are convinced that a new and not fully tested mechanism – such as the CBAM – must first prove its effectiveness in fighting carbon leakage and ensuring a level playing field and only then decisions on the phase-out (and especially the rapid phase-out) of free allocation could be considered following thorough evidence-based assessment.

LPK believes that free allocation as a measure to counteract carbon leakage and the audits mandated by the Energy Efficiency Directive are distinct policy measures pursuing different aims and as such the two should not be intertwined. Linking these measures together would place additional administrative burden on companies and would interfere with the autonomy of their investment decisions.

We are convinced that to reach the 2030 greenhouse gas emission reduction targets, the ETS must be as far as possible market-based and economically efficient, ensuring adequate protection against carbon leakage, adequate financing arrangements and favorable investment conditions. It is also very important consider existing differences among industry sectors, as well as differences in their capacity to transform, including development and availability of low-emission technologies.

LPK’s position on CBAM and position on ETS.