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Last Updated: Tuesday, 15 January 2008, 19:23 GMT
Climate plans spark EU job fears
Heavy industry is already having to absorb increasing electricity prices
Trade unions and business leaders say EU plans to cut carbon emissions could harm European jobs and industry.

The European Trade Union Confederation fears up to 50,000 steelworkers' jobs could go if their industry moves to areas with lower costs for polluters.

And lobby group BusinessEurope says companies will lose competitiveness if they are forced to buy all their rights to emit carbon dioxide.

The European Commission's proposals will be revealed next week.

But the aim of the new rules on fighting climate change is clear.

What we don't want is for companies to fire people in Europe and relocate to cheaper, dirtier locations
John Monks
European Trade Union Confederation General Secretary

It is to reduce carbon emissions by 20% by 2020, by increasing the use of renewable energy and revamping the EU's emissions trading scheme (ETS).

Launched in 2005, the scheme has been criticised for allowing big polluters free carbon credits.

Companies are set CO2 limits and then buy or sell permits if they miss or beat their targets.

It is thought the commission will now try to reduce the number of free credits substantially, requiring industry to buy most of them at auction.

'Full free allocation'

BusinessEurope's Secretary General Philippe de Buck has written to commission president Jose Manuel Barroso, warning that "the competitiveness of European companies" will be harmed by the auctioning of allowances and "exacerbated" by increasing electricity prices.

Trade unions are concerned that a new permits system would force heavy industry to move operations out of the EU, to neighbouring countries such as Turkey, Ukraine and Russia.

"What we don't want is for companies to fire people in Europe and relocate to cheaper, dirtier locations," says European Trade Union Confederation General Secretary John Monks.

Unions fear such a change could lead to 50,000 of the steel industry's 350,000 jobs being lost.

Mr Monk's solution is for a carbon tax on imports from countries that are not trying to cut CO2 emissions.

He believes that such a tax would "equalise carbon costs", although he accepts that it might fall foul of World Trade Organization rules.

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