29 October 2008 11:23 [Source: ICIS news]
PARIS (ICIS news)--The European nitrogen fertilizer industry will cease to be competitive and producers will move out of the EU if they are forced to buy emissions rights under the EU emissions trading scheme (ETS) after 2012, said a regional trade body on Wednesday.
The European Fertilizer Manufacturers Association (EFMA) said a study by the Pellervo Economic Research Institute (PTT) proved the nitrogen fertilizer industry was energy intensive and exposed to international competition and should therefore be granted “free emissions rights” when the revised ETS came into force in 2013.
The EFMA said “producer prices of the European nitrogen fertilizer industry will increase by 21-34%” if the industry were subject to full auctioning “to compensate for the increase of 30-48% in the cash manufacturing cost”.
“Given the global competition the industry would not be able to pass on the extra cost to the selling price of fertilizers,” said the association.
“European fertilizer production would be cut and production moved to countries free of this cost,” it added.
The PTT report “clearly justifies the granting of free emissions rights to the fertilizer industry to maintain its competitiveness”, said the EFMA.
The European Parliament’s environment committee voted earlier this month for energy-intensive participants in the EU ETS to buy 15% of their allowances in 2013 under an auctioning process and to be subject to full auctioning by 2020.
The price and cost increases estimated by the EFMA are based on a price of carbon dioxide (CO2) of €30-50/tonne ($38-64/tonne).
The PTT report is entitled “The effects of a revision of the emissions trading directive for the period starting in 2013 on the European nitrogen fertilizer industry”.
The Helsinki-based institute carries out research that focuses on questions relating to regional economic development and regional policy.
($1 = €0.79)
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