"Climate & energy policies: post 2020 EU ETS" | Dr Laura Cohen | EPCF 2014

EUROPEAN PARLIAMENT CERAMICS FORUM

Post 2020 EU ETSDr Laura Cohen, Chief Executive, British Ceramic Confederation

3 December 2014

The EU ETS and the ceramic industry• More than 1,200 ceramic installations ‒ representing around 10% of total number of installations

• Less than Mt 14 in 2013‒ less than 1% of emissions

• Around 80% of installations are “small” (<25 ktonnes)

• Energy intensive sector with long investment cycles

• Ceramic Industry Roadmap

Post 2020 EU ETS• The system is at another crossroads

• A new balance needs to be defined: • Variables of the equation: security, sustainability, affordability

• Known elements:‒ Ambitious 2030 decarbonisation target overall

-40% by 2030; -20% by 2020 vs. 1990 More challenging for ETS sectors: -43% in 2030 vs. 2005; -21% in 2020 vs 2005

‒ Steeper decarbonisation path (Cap: -2.2% annual linear factor vs. 1.74%)‒ Increasing prices for carbon and energy‒ Possible Market Stability Reserve‒ Continuation of carbon leakage measures BUT

Which sectors? What level of protection? For how long?

Post 2020 carbon leakage

• If the ceramic industry is excluded from the post 2020 carbon leakage provisions, it will have to purchase on average 90% of the allowances by 2030 (more than € 4bn*)

*assuming €30 / tonne and production rate increase at 1% / year

Our policy recommendations for post 2020 ETS • Predictable and stable legal framework

• No change to pre 2020 framework

• Carbon leakage protection proportionate to the level of ambition‒ Remove cross sectoral correction factor‒ Compensation for indirect costs

• Address technical and economic feasibility

• Address complexity of partial cessation and capacity change rules – e.g. support major investment

• Consider international context – protection while no equivalent commitments

• Market Stability Reserve has to be taken in context of holistic structural reform

• More focus on untapped potential in non-ETS sectors like buildings

Thank you for your attention!

Thank you for your attention!