We recognize the challenges presented by global climate change and we support ongoing international efforts to implement an effective global climate change response.
The chemicals industry in Europe is serious about reducing aggregate emissions of green-house gases (GHG) and CO2 intensity. Since 1990, the industry has grown total production by 70% while reducing GHG emissions by more than 50%, meaning it has reduced its GHG intensity by three quarters. Furthermore, many of the advanced materials produced by the chemicals industry – such as thermal insulation and high strength wind turbine blades – are indispensible to a lower carbon economy.
However, there is no economic or environmental benefit from driving up GHG mitigation costs to the point where industry and investment (and GHG emissions) are relocated out of Europe in the process called ‘carbon leakage’. European de-industrialization is not and should never be seen as an acceptable option on the journey to a lower carbon economy.
We support the European Emissions Trading Scheme (ETS) as a means of meeting CO2 reduction targets at minimum cost through efficient market mechanisms. However, the emissions market should be technology neutral and CO2 prices should not be targeted at support for particular energy sources e.g. natural gas or renewables.
Where CO2 and other energy taxes, levies and surcharges are too high, relative to other regions, for industries exposed to international competition (this includes the chemicals sector), there will be damaging and unproductive leakage of investment, carbon emissions and jobs to other regions, with no net benefits for the global climate.
Europe consequently needs to make sure that energy intensive industries are not exposed to carbon and investment leakage, either through the reform of the ETS or any other EU or national policy measures.
Energy cost is a crucial competitiveness factor for the chemicals and other energy intensive industries. We strongly believe that the best way for policy makers to support European industrial competitiveness is to complete a truly connected and effective European energy market.
Energy policy should encourage new energy investments to compete on a market basis. Any subsidies or other forms of policy intervention should be phased out over an agreed minimum period and focused on achieving rapid and full market competitiveness.
The costs of covering the inherent volatility of renewable energy should be carried by the generator and not by capacity or other charges extended to the market as a whole.
Policy makers should seek GHG mitigation from the ‘non-traded’ sector (including domestic and transport) at least equal to the ETS ‘traded’ sector (power generation and industry).
This is crucial to ensure lowest cost GHG reductions across the whole economy and to avoid unnecessary competitiveness damage to European industry.
We are consequently in favor of concerted long-term measures to improve thermal insulation and energy efficiency in all sectors of the economy.