ETS POST- 2020 REVISION THE LIME SECTOR Ms. Eleni Despotou EuLA Secretray General
Jan 21, 2016
ETS POST- 2020 REVISIONTHE LIME SECTOR
Ms. Eleni Despotou
EuLA Secretray General
WHAT EULA REPRESENTS
EU LIME MARKETS
MANUFACTURE OF LIME - AVERAGE SHARE OF CO2 EMISSIONS
LIME PRODUCTION PROCESS
Calcium carbonate Lime
CaCO3 + energy CaO + CO2
100 g
56 g 44 g
LIME GHG EMISSIONS IN EUROPE
Lime industry emissions (2012) represents:
0,665 % of total EU emissions (National emissions reported to the UNFCCC, EEA)
5,672 % of manufacturing and construction emissions
Source: Ecofys 2015 (Bubbles size show emissions)
EU ETS REVISION: MAJOR CONCERNS
1. Remain in the Carbon leakage list (considering investment leakage)- Assumptions (carbon costs, “proxies”: GVA/GOS, carbon intensity/emission intensity)- Criterion / eligibility / NACE nomenclature- Coverage (tiered approach? Cost pass through capacities?)
2. CSCF (“Industry cap”)- The CSCF is fixing the total cap for the industry (in the total basket of allowances), and therefore
might create a “shortage” even for the best performers- Specific situation of the lime sector: process/raw material emissions that cannot be avoided - Delete the CSCF in line with the Energy Intensive industries.- Not apply the CSCF to the process emissions
3. Level of allocations- A smart allocation method that will take into account the real levels of production provides more
flexibility, fairness and avoid over allocation (i.e. tackle the "surplus") compared to the current system.
4. Benchmark revision- Administrative burden, periodicity- Process emissions / combustion emissions- Link with “dynamic” (ex-post) allocation
Locations outside the EU for which differences in energy costs and carbon costs exceed transport costs
Sea transport costs
Rail transport costs
OCTOBER 2014 EU COUNCIL CONCLUSIONS
Binding EU target of an at least 40% domestic reduction in greenhouse gas emissions by 2030 compared to 1990
- ETS = 43% reduction compared to 2005 (i.e. annual reduction factor to reduce the cap on the maximum permitted emissions from 1.74% to 2.2% from 2021 onwards)
- Non ETS = 30% by 2030 compared to 2005
A Reformed Emissions Trading System
A (structural) instrument to stabilise the market (MSR)
‘Free allocation’: existing measures will continue after 2020 to prevent the risk of carbon leakage due to climate policy (if no comparable effort)
‘Benchmarks’ for free allocations: periodically reviewed
Direct and indirect carbon costs taken into account (‘indirects’ = EU state aid rules)
“Most efficient installations in these sectors should not face undue carbon costs leading to carbon leakage”
Future allocations will ensure better alignment with changing production levels in different sectors
Consideration to ensure affordable energy prices and avoid windfall profits
OCTOBER 2014 EU COUNCIL CONCLUSIONS: SPECIFIC MEASURES
Opt-out of energy sectors (free allowances) for low income MS (GDP per capita below 60% of EU average, i.e. Romania, ?) continued up to 2030
NER 400: 400 million allowances for low carbon innovation in CCS and renewables, including industrial sectors
Modernisation fund (2% of EU ETS allowances) to low income MS (GDP per capita below 60% of EU average) to improve energy efficiency and to modernise the energy systems
“Solidarity, growth and interconnections” fund (10% of the EU ETS allowances to be auctioned by the Member States) distributed amongst countries with GDP per capita < 90% of EU average
EU ETS
NER 400
Modernisation fund
(2%)
10% “solidarity”
Auctioned allowances
Free allowances
(direct)
90% auctioned
EU 28
Opt-out of energy sectors
(max 40%)
ILLUSTRATION OF THE EU ETS POST-2020
Indirects state aids
BackloadingUnused
Phase III + NER
MSREU LEVEL
MS LEVEL
MSR 300
Key conclusions
• As long as there is no international agreement on climate change, the EU ETS must also address the competitiveness of energy-intensive industries.
• Lime, an energy-intensive industry should remain in the list of sectors at risk of carbon leakage
• Free allocation should be based on most recent and representative production reflecting the economic and industrial reality.
• Feasible benchmarks and revised only once technological improvements are proven (Current lime one, too stringent)
• Process/raw material emissions (special provisions as cannot be avoided)
THANK YOU!
www.eula.eu