Chemical firms lobby EU on emission trading threat

08 July 2008 11:55  [Source: ICIS news]

STRASBOURG (ICIS news)--European chemical companies are stressing the impact of proposed changes to the EU’s emissions trading scheme (EU ETS), saying it may put them out of business in an exhibition at the European Parliament.

 

“Let the European chemical industry stay here, do not push us away,” a spokesman for an unnamed chemical company said on Tuesday, commenting on the debate by parliamentarians to boost emissions targets.

 

He added that Europe could see a mass exodus of chemical companies if enhanced rules came into effect in 2013.

 

There was considerable support from MEPs for the chemical industry’s concerns amid fears that increasing the cost burden on European chemical producers would simply benefit cheaper producers in the US, Brazil, China or the Middle East, the spokesman said.

 

“Only if the rest of the world agrees to follow Europe’s suit on setting allowances for emissions - essentially creating a global ‘price’ for carbon - will the European chemical industry be able to compete effectively on the international market,” he added.

 

European chemical industry council Cefic has organised the exhibition - Chemistry Does the Trick: Building Blocks for Climate Change Solutions - to show the industry was more than just a producer of greenhouses gases and that it could help the fight against climate change.  

 

Although the debate focused on the inclusion of airline emissions in the EU ETS, many of the proposed changes could have an impact on chemical companies if they were included when the existing system was upgraded from 2012, the spokesman for the unnamed firm said.

 

The proposal to allow the vast majority of airline emission allowances to be given away for free (85%) with the remainder sold via auction, was of particular importance to chemical companies, since the European Commission (EC) was proposing to auction all the emissions allowances for companies covered under the existing scheme after 2012 - a move that the chemical industry believed would be ruinous, the spokesman said.  

 

“This would essentially mean that industry would be paying €5bn ($7.9bn) a year without being offered anything in return - it is tantamount to a production tax,” he added. 

 

“We believe that the allowances should instead continue to be given away for free but on the basis of certain benchmarks, that shows how far companies have gone to reduce their emissions," said the spokesman.  

 

This would be the case with airline emissions when they were included in the EU ETS and set a welcome precedent for the chemical sector, he said.

 

“The European chemical industry, unlike, say, the power sector, is subject to global competition,” the spokesman added. “Any increased costs we incur in Europe cannot be passed on to our customers.”

 

Last week the German chemical industries association (VCI) said the EU ETS was its largest threat to long-term growth.

 

Carbon dioxide (CO2) emissions from petrochemicals, ammonia and aluminium will be included in the EU ETS regulations post-2013, following an EC announcement in January.

 

The EU ETS is a Europe-wide scheme which aims to reduce CO2 emissions and combat the serious threat posed by climate change.

 

($1 = €0.64)

 

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By: Chris Jones
+44 20 8652 3214

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