Carbon sledgehammer will crush competitiveness
IRELAND'S dairy processors have been managing CO2 emissions since 2005.
Due to their scale, the majority of dairy processors participate in the Emissions Trading Scheme (ETS), whereby they are limited in the quantity of CO2 that they can emit annually.
Processors are currently given a quantity of CO2 allowances based on their historical emissions and if this level is exceeded they are required to purchase CO2 allowances in the marketplace.
However, this scheme will change in 2013 as free allocations will be phased out and processors will be required to purchase their CO2 requirements from an EU CO2 market.
Based on current production levels and on a predicted carbon price of €30/t, this could amount to an annual cost of €19m to the industry.
As the system is only applicable in the EU, it will put the EU dairy industry at a considerable disadvantage when competing with non-EU dairy exporters.
Unfortunately, EU governments seem unconcerned with the implications of this and are already considering increasing the 20pc reduction commitment to a 30pc reduction.