No more status quo on climate goals: Cefic reacts to EU Emissions Trading System reform debate

Date

29 Sep 2016

Sections

Sustainable Dev.
Transport

Press release

Brussels, 29 September 2016: Cefic – the EU chemical industry council – today welcomed the conclusions of a European Parliament debate on proposed reforms to the EU Emissions Trading System (ETS). ETS aims to cut greenhouse gas (GHG) emissions in European industry. Its reform will be crucial to delivering on the EU’s climate goals and ensuring a successful transition to a low carbon, competitive European economy.

Said William Garcia, Executive Director for Energy, Climate & HSSE, Cefic, “Getting ETS right will necessitate moving beyond the status quo. Today’s debate highlights that decision-makers are taking seriously the risk that penalising companies alone won’t help tackle climate change. The proposed reforms risk simply shifting industry production – and therefore emissions – to other global regions with less strict emissions laws.”

Cefic is pleased to see that concerns over the impact of ETS reforms on the future competitiveness of Europe were raised by many senior Parliamentarians in today’s debate. Discussions centred on the potential negative impact of proposed reforms – particularly the tiered approach to free allocation. Speakers not only pointed to its potential impact on European jobs, but also on Europe’s readiness to innovate breakthrough technology towards achieving climate goals. Simplicity was urged by all, to give certainty to companies on investing in a future Europe.

Investment leakage: A disturbing reality

Garcia also highlighted the reality of investment leakage – that companies looking where to invest their manufacturing facilities for the future would prefer other global regions to the EU. Although it’s as yet impossible to demonstrate evidence of carbon leakage because we don’t yet have the data, he states that “What we do have hard evidence for is that investment by the chemical sector is increasingly happening in China. Between 2005 and 2015, EU chemical industry investment rose from 17.2 billion to 20.7bn Euros. China, however, jumped from 14.4bn Euro in 2005 to 95.6bn Euro in 2015. There’s no doubt about it - industrial production for chemicals is shifting to China. This very real risk of investment leakage needs to be acknowledged.”

We have a better solution

Many industry stakeholders firmly oppose the proposal to increase the number of tiers used to differentiate the number of free allowances that would be distributed to industry sectors, which is based on expired production data. The European chemical industry is innovating real, concrete solutions to climate change – such as advanced materials for renewable energy production, and energy efficiency products for other sectors. It has also cut fuel and power consumption by 22% since 1990, and greenhouse gas emissions by 60% since that time.

Said Garcia, “Despite this excellent performance, the reforms risk penalising companies by proposing a multi-tiered approach allocating allowances to certain sectors at the expense of others. We think the Commission should value jobs in all sectors equally.” He also cited a recently released joint industry letter that tackled this issue. Cefic has long advocated for a system of dynamic allocation rewarding best performers for cutting their emissions, and benchmarks based on real production. This was echoed in the October EU Council Conclusions, that best performing companies shouldn’t bear increased carbon costs. Here's Cefic's infographic on the Emissions Trading System.

Contact: For further quotes, data or information please contact Dervla Gleeson, Cefic Media Relations Manager (dgl@cefic.be)

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