EU leaders aware of chemical industry’s energy needs – Cefic

Interview article by Jonathan Lopez

LONDON (ICIS)–The European Council should consider changing the current emissions trading system for energy-intensive industries as at present it hurts the competitiveness of European companies and is “discouraging investment,” a director at the European Chemical Industry Council (Cefic) said on Monday.

Peter Botschek, director for energy, health, safety and environment at Cefic, said EU leaders have already “some awareness” of the needs of energy-intensive industries and hoped they will take a more positive approach towards them when decisions are made during a European Council summit to take place in Brussels on 23/24 October.

“In the conclusions of their [European Council’s] March summit you find a particular sentence about how to prevent carbon leakage, having in mind the energy-intensive industries in Europe. We are now eager to have that sentence followed up in October [by EU leaders] so the Commission [the executive body of the EU] gets a clearer direction [for its final proposal],” said Botschek.

The Commission presented in January its energy proposals, which angered many in energy-intensive industries, as expressed by Botschek himself at the time.

The summit which took place in March was expected to place the energy issue as a priority and expand on recent proposals, but the crisis in Ukraine at the time overshadowed the rest of topics.

Botschek refers to the conclusions of the March summit and to a sentence within them which read – ‘[The Commission is asked] to rapidly develop measures to prevent potential carbon leakage in order to ensure the competitiveness of Europe’s energy-intensive industries… [to provide by October 2014] the necessary stability and predictability for its economic operators’.

“We have very clear ideas of how this can be better developed. The one thing about the EU is that it should be conditional when going to the United Nations negotiations. It should not set everything in stone [so it has flexibility to negotiate],” said Botschek.

He was referring to the climate change summits to take place in December in Peru and next year in Paris, where the UN will try to reach a global agreement to reduce emissions.

Many in energy-intensive industries have been outspoken about their opposition to the emission credit system and have repeatedly called for immediate changes as they see the system too rigid, affecting the competitiveness of the European industry. Botschek defined it as “discouraging investment”.

On 4 September, the association of energy-intensive manufactures of Europe, a group of lobbies to which Cefic belongs, published an open letter to the EU Council, the Commission and the European Parliament asking for changes in the credit system. They spoke about “overwhelming” costs for energy-intensive industries were the system to remain unchanged.

“We are worried because right now the policy debate in Brussels is only about removing surplus allowances from the markets. For us that is not the right approach. We feel there should be structural reform, and we are really worried that pushing up the carbon cost is considered, without at the same time considering the carbon leakage protection,” said Botschek.

He added: “When you look at the total number of installations under the scheme, there are in total 12,000 in the EU. However, 80% of the number of installations covers just 5% of the emissions. Does it make sense having them in the scheme at all?”

Botschek said the new emissions credit system should be dynamic and flexible to adapt to the needs of the industry. He added Cefic has found the support of certain governments like the French or the Dutch to this idea, and hoped the EU leaders’ summit in October will lean towards that direction to reform the system structurally.