EU countries back plan to give industries more free CO2 permits

By Kate Abnett

BRUSSELS, Sept 16 (Reuters) - European Union countries on Wednesday backed proposals to give more free emissions permits ​to heavy industries over the next few years to help struggling companies to stay economically competitive.

• EU countries backed a proposal by the European Commission to give industries an extra 121 million free CO2 permits over 2026-2030, based on their heat production and fuel use, the council of the EU said in a statement.

• That could save companies about €8.25 billion ($9.52 billion) in carbon costs, Reuters calculations show, and would give companies more free permits than the European Commission had originally proposed.

• The beneficiaries would include chemical producers, metals processing companies and ceramics and glass makers.

• Under ⁠the ​EU's Emissions Trading System (ETS) heavy industries have to buy permits to emit CO2, providing ​an incentive to emit as little as possible. But there is also ​a pool of free CO2 permits to help companies to compete with foreign rivals that do not pay emissions costs.

• The EU plan will temporarily add extra permits to this free allocation despite the ETS being designed to reduce free permits gradually to ensure emissions decrease over time.

• EU countries will negotiate the final rules — known in EU jargon as the ETS "fall-back benchmarks" — with the European Parliament. The negotiations are being fast-tracked to reach a final deal this year.

• The EU is also negotiating broader reform of its ETS, aiming for a deal in 2027.

($1 = 0.8668 euros)

(Reporting by Kate AbnettEditing by David Goodman)