EU proposes tougher 2030 emissions target, will impact chemicals

Author: Jonathan Lopez

2020/09/16

LONDON (ICIS)--The European Commission is set to announce a higher target for greenhouse gas emissions reduction by 2030, a move set to negatively affect energy-intensive industries like chemicals.

The EU’s executive body wants the 27-country bloc to reduced emissions by 55%, compared with 1990 levels, up from the previous target of 40%.

The measure would still have to be approved by the European Parliament and the EU Council, which represents the 27 national governments.

The Commission aims to meet its commitments to the Paris Accord which aims to limit global warming to below 2 degrees Celsius by 2100, compared with pre-industrial levels.

The new targets were leaked to Euroactiv, an EU-focused media outlet; consult the full document here.

The European chemicals industry is set to feel the pinch from the new target via higher costs for its energy consumption.

As an energy-intensive industry, its use of energy already puts a financial burden  on its manufacturers compared with peers in the US, for instance.

Equally, environmental rules in the US and China, the other two big global chemicals producers, are less strict, putting Europe’s industry at another disadvantage.

‘EXTREMELY AMBITIOUS’
Germany’s chemicals trade group VCI, bellwether in Europe as it represents companies in the region’s largest chemicals industry, asked the EU to “think carefully” about emissions targets if it intends to keep its manufacturing sectors competitive.

VCI said the EU should consider extending the Emissions Trading System (ETS), under which polluting companies pay a carbon price for their emissions, to other economic sectors so the burden can be shared.

“The higher the EU sets the bar for ETS, the more costs for energy-intensive industries such as chemicals. It is therefore important that other sectors [not only energy-intensive ones] also contribute,” said the trade group.

The German chemicals industry employs around 450,000 workers and posted sales of €193bn in 2019.

27 MEMBERS ON SAME PAGE
The German research institute Zew said on Wednesday stricter climate targets would require existing EU regulations to become "more flexible" to soften potential negative economic consequences.

Whatever changes are made to the current ETS should be done according to principles of "fair and solidarity-based burden sharing" and ensuring all 27 member countries are on the same page regarding climate neutrality.

"The choice of instruments and policy measures will have a major impact on how the economic burdens arising from the European green energy transition are distributed, who the potential winners will be and whether it will ultimately be a success," said Zew.

"In the future, the EU’s uniform CO2 pricing scheme should be extended to include national efforts in the areas of transport, buildings, heating and agriculture, as it represents an important point of convergence in the debate on implementing the stricter climate targets.

Front page picture: A coal-fired power station in Germany; archive image
Source: Martin Meissner/AP/Shutterstock