The EU chemical industry – which provides 1.2 million jobs and contributes over 550 billion Euros to the EU economy – calls for a reformed European Emissions Trading System (ETS) that enables allocation of free carbon allowances based on recent industry production and improved emissions performance so all sectors get the opportunity to thrive in Europe.

ETS is designed to cut industrial carbon emissions from European manufacturing facilities. Recent proposals would see perceived at-risk sectors receive greater free allocations of carbon allowances – the ‘currency’ underpinning ETS.

“Proposed ETS reforms to divide industries in groups or tiers protect certain industries at the expense of others. This is not only unfortunate but undesirable, since it's based on old industrial production data. Before taking such a decision, updated and recent data should be applied at the very least”, said Marco Mensink, Director General, Cefic. “Cefic has already promised the Commission to share data for the EU chemical sector, which includes over 1,100 manufacturing plants affected by ETS. We now ask other stakeholders to join this effort."

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The EU chemical industry’s vision is that factories that invest in cutting their emissions are incentivised by receiving more carbon allowances to offset the cost of this investment. This was echoed in the October EU Council Conclusions, that best performing companies shouldn’t bear increased carbon costs.

Data is the solution

ETS needs reform as a result of a dysfunctional allocation system. Industrial production benchmarks are used to set the level of free carbon allowances. However, benchmarks currently in use were based on industrial production from before the global recession. Industrial production levels fell during the crisis due to declining demand, leading to a surplus of carbon allowances. ETS is thus not as effective as it should be – using data from recent industrial activity to set benchmarks would bring back a much needed dose of reality.

This would increase the fairness for EU chemical producers of staying in Europe at a time when other sectors are under economic pressure and manufacturing is shifting to China. Given that the EU chemical sector is an ‘industry of industries’, supplying raw materials to other key sectors like construction and automotive, the economic impact of penalties for the chemical sector may have a trickle-down effect.

For all enquiries, please contact Dervla Gleeson, Cefic Media Relations Manager (dgl@cefic.be) +32 (0)676 7289

About Cefic: Cefic – the EU chemical industry council – is the voice of over 29,000 chemical companies in Europe. We represent over 1.2 million jobs in Europe. www.cefic.org