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European paper industry reaction to the US administration's withdrawal from Paris Agreement on climate change
"The US administration’s decision to step down from the Paris Agreement sadly puts at risk the global efforts needed to address climate change. It also regrettably reflects a view that climate action would undermine industry competitiveness. To make the case for action - and win back the US, Europe must decisively demonstrate that decarbonisation can go hand in hand with industrial competitiveness and investments. The European paper industry has a vision through its Investment Roadmap to decarbonise by 80%, create 50% more added value and increase its investment by 40% by 2050. This should be done in the background of a Paris Climate Change Agreement which provides a solid framework for climate action and fosters a global level playing field" says Sylvain Lhote, Director General at CEPI
Statement from the alliance of energy intensive industries on the clean energy for all Europeans package
We, the Alliance of Energy Intensive Industries representing more than 30,000 companies that are Europe’s largest energy consumers and together, directly employ more than 2.8 Million people, want to make a success of the Energy Union. We see it as a potential enabler of European industry’s competitiveness and a unique opportunity to deliver on Europe’s ambitious transition to a low-carbon energy system. Energy Intensive Industries make a series of recommendations to reach this ambition in an effective, secure and cost-conscious way that delivers value for investment to European economic contributors such as industry. The Alliance would welcome a new energy framework that:
- ENABLES INNOVATION IN INDUSTRY SECTORS THAT DEVELOP PRODUCTS AND TECHNOLOGIES leading to lower greenhouse gas emissions (GHGs) across value chains. Our industries offer low-carbon solutions to help Europe transitioning to a low-carbon, energy efficient region. Our products and innovative processes have a strong potential to enable greater energy efficiency or help the wider deployment of renewables;
- PUTS THE GLOBAL COMPETITIVENESS DIMENSION HIGH Our industries will be key in delivering several elements of the Clean Energy Package. The Governance of the Energy Union must acknowledge this and not relegate the competitiveness dimension as secondary to other aspects, but increase its prominence;
- SECURES INDUSTRY’S ACCESS TO COMPETITIVE, RELIABLE, AND SUSTAINABLE ENERGY through a fully liberalised European electricity market. The growing share of variable renewable energy production in the grid represents both a challenge and an opportunity for industry. Negative impact of system changes on industry and on security of energy supply must be avoided. Policy framework conditions should be nondiscriminatory, technology-neutral and predictable over the longer term to enable sustainable investment decisions;
- AVOIDS COSTLY AND UNNECESSARY OVERLAPPING LEGISLATION: The EU ETS and the Market Stability Reserve will lead to a higher price of carbon under the 2030 framework. It is therefore important that new measures do not overlap with ETS, adding an additional layer of obligations for industry, but rather target untapped potential laying in e.g. buildings or mobility sectors. Enabling better energy performance in those sectors would stimulate our economy and create new jobs and growth opportunities;
- CLEARLY DIFFERENTIATES ENERGY EFFICIENCY AND REDUCTIONS IN INDUSTRIAL ACTIVITY: looking at levels of energy consumptions in the different sectors of our economy, it is clear that so far the 2020 objective is being partly met through reduced levels of production. Our industries wish to contribute to growth in Europe while, at the same time, improving their energy efficiency performance; in this framework, it is relevant to assess reduction of energy consumption in relative terms;
- INTEGRATES RENEWABLE ENERGY SOURCES IN A COST-EFFICIENT MANNER: as long as it is in place, support to renewable energies must become cost-efficient and must focus on technology-neutral innovation. Support
schemes should be market-based and market responsive. They should only benefit technologies that are not yet mature, on a temporary basis.
As key players in the transition to a low-carbon economy, energy intensive industries and value-chain partners will provide constructive input into the decision-making process.
European paper industry reaction to Fertilizers Europe “alternative facts” in “Allowances balance calculation in the EU ETS” Ecofys report
On 15 May 2017 Ecofys published the report “Allowances balance calculation in the EU ETS”, commissioned by Fertilizers Europe.
The document is full of omissions in data collection and analysis. Although the authors acknowledge such shortcomings throughout the whole report, they still conclude that, even with improved accuracy “by performing an extensive data collection […] it is expected that the main conclusions of this study would remain the same”. In other words: the results would be the same, regardless of facts and figures.
Such a statement would be sufficient to disregard this alleged “objective study”.
Yet in CEPI we are strongly convinced that facts and figures are essential to developing informed decisions. CEPI facts and figures are backed by our in-house statistical team and are third-party verified. We believe this ethos should equally apply to others.
As the Ecofys document is built on an impressive amount of misleading or “adjusted” information, we believe it is imperative to rectify the claims against the pulp and paper industry:
1. Sector definition and cross-boundary heat flows
A whopping 20% of additional carbon emissions for our industry are not accounted for in the Ecofys report.
In the ETS, emissions from heat are allocated to the heat consumer, not the heat producer (where emissions effectively take place). Heat-related emissions are thus not counted under the ETS registry codes “pulp and paper” but under “combustion installation”, even if these emissions happen within the perimeter of the industrial site.
The impact of these emissions is massive: the sector actually moves from having a surplus to having a shortage of allocations.
Ecofys is well aware of the impact heat flows calculations has on industry allocation, particularly for the pulp and paper industry. Yet, it decides to disregard them, concluding that “indicatively” the pulp and paper industry has “an allowance surplus that carries long into phase IV”.
Clearly, by using “alternative facts”, anything can be “indicatively assumed”.
2. Emission levels in Phase III
Despite concrete achievements, our sector’s emission reductions have not matched the allocation reductions induced by the cross-sectoral correction factor. For example, in 2016 only our sector was 4% under-allocated.
Our sector is under-allocated and, unless major disruptions happen, will remain so until at least 2020. The regulatory impact post-2020 is still unknown.
Any increase in allocation surplus for our sector, as illustrated in the Ecofys report from 2014 to 2020, is unreal and unrealistic.
3. Emissions carried over from Phase II
First and foremost, the above-mentioned cross-border heat flow applies also here. The figures lack data on emissions from combustion installations in the paper industry. Had these figures been taken into consideration, they would have shown a cumulative surplus in line with other industrial sectors. This comes to no surprise as the pulp and paper industry, like all industries, was heavily hit by the economic and financial crisis.
Moreover, at the beginning of Phase II, in 2008, the pulp and paper industry had 872 open permits in the ETS. In 2013, at the beginning of phase III the open permits were reduced to 825.
Many of the installations that closed were small and medium enterprises, often family-owned. When an installation closes those allowances are gone: either released to the market or cancelled. There is no intra-company transfer.
Unused allowances released to the market could be in anyone’s account, including in fertilizer companies.
Assuming that all those allowances remained at the disposal of the pulp and paper industry for future use, painting the image that the sector is sitting on an immense amount of unused credits, is purely fictional.
4. Carbon intensity improvements (past, present, future)
The pulp and paper industry is proud of the achievements reached in reducing carbon emissions over the past years. Since 2005, when the ETS began, we have reduced our carbon intensity by around 21%.
This was the result of real investments and it lead to the creation of jobs and growth. In the recent years we have been investing 3.5 bn €/year, including investments in energy efficiency and higher use of renewable energy sources.
In fact, in some countries we have even achieved an impressive 75% emission reduction since 2005, without jeopardising international competitiveness.
The Ecofys report, on the contrary, retroactively assumes no historic emission intensity improvement occurred. Nor future emission intensity improvements are foreseen.
We strongly disagree.
5. The misplaced logic of “improvements are not possible”
The carbon footprint of the pulp and paper industry is already very low (0.7%of EU GHG emissions) and will further reduce.
We see tremendous potential in linking the low-carbon economy to the bioeconomy and the circular economy. Our mills are already producing cost-effective low carbon solutions to replace carbon intensive products.
For instance, looking at fertilisers:
• Bio-based fertilisers → ETS benchmark: 0.02 - 0.12 tCO2/t (pulp)
• Fossil-based fertilisers → ETS benchmark: 1.619 tCO2/t (ammonia)
There is definitely some untapped potential to be exploited!
The Ecofys report, on the contrary, assumes no improvement in carbon-intensity both in the past and the future. Meaning rewarding incumbents and putting up barriers to innovation.
We strongly disagree.
Climate change is a serious threat, and needs to be treated seriously. We need to refocus on investments in the EU economy, driving the transition towards a low-carbon economy where Europe leads by example
Within this context, the ETS needs to promote and reward those investing in low-carbon technologies and solutions.
All sectors are important and should be treated equally. And they all need to contribute.
The clock is ticking and 2021 is just around the corner. We need to close the ETS negotiations as soon as possible, to give industry the regulatory predictability needed to start planning the next wave of low-carbon investments.
The Parliament, the Council and the Commission enter now the trilogue negotiations that will shape the ETS directive after 2020.
We, the 17 signatories of this paper, energy-intensive sectors representing about 2 million jobs in the EU and comprising many SME’s, are fully committed in taking our share of responsibilities and reducing our emissions.
However, we are also very concerned by the impact that some proposed measures would have on our global competitiveness.
We stand by one principle: sufficient free allowances must be available to allocate every carbon leakage installation at the level of the benchmark, as to avoid additional direct and indirect costs, resulting from the implementation of the ETS that are not faced by our non-EU competitors.
This is true more than ever, especially when some measures, which have been proposed without any impact assessment on our sectors, might have a dramatic impact on our competitiveness if adopted without the necessary flexibility in the share of free allocation, like the permanent cancellation of allowances, or the doubling of the intake rate of the MSR.
We therefore ask the trilogue negotiators to acknowledge, in their final compromise, the mutual importance of our sectors for the EU economy, in particular for European jobs, and all our economic value chains by:
1) Ensuring enough free allowances are available to allocate all carbon leakage installations at the level of the benchmark. This is not a free lunch for industry as less than 5% of the installations will receive enough to produce, the remaining 95% will have to buy allowances. We therefore support the Parliament proposal to reduce the auctioning share by max 5% (from 57% to 52%) if the CSCF is necessary.
2) Rejecting any approach which aims at discriminating a few from other sectors exposed to carbon leakage risks, namely the “tiered CSCF” in the event that the 5% reduction mentioned above is not sufficient. This discrimination between industrial sectors goes against the principle set in the October European Council Conclusions that best performing companies in ETS carbon leakage sectors should not bear further carbon costs. Indeed, a tiered CSCF would entail that even best performers in most sectors would bear significant carbon costs.
3) Supporting the proposal from the Parliament by which the Innovation fund is fully financed from the auctioning share.
1. Cefic - European Chemical Industry Council
2. CEMBUREAU – European Cement Association
3. CEPI – Confederation of European Paper Industries
4. Cerame-Unie - European Ceramic Industry Association
5. EDG – European Domestic Glass Association
6. Epmf – European Precious Metals Federation
7. European Copper Institute
8. ESGA – European Special Glass Association
9. EUROALLIAGES - Association of European ferro-Alloy producers
10. EUROGYPSUM - Gypsum Industry
11. EuLA – European Lime Association
12. EXCA - European Expanded Clay Association
13. FEVE – The European Container Glass Association
14. FuelsEurope - European Petroleum Refining Industry
15. Glass Fibre Europe – The European Glass Fibre Producers Association
16. Nickel INSTITUTE
17. International Zinc Association
In view of the European Commission's publication of its Winter Energy package, the European paper industry has compiled a position paper outlining its stance on key aspects of the proposal. Here are our key messages:
Deliverables expected by “Clean energy for all Europeans” package, as a whole:
• Promotion of cost-competitive energy prices
• Consistency between policy measures
• Stability and predictability of the regulatory framework
Deliverables expected by specific legislative proposals:
• Allowing for market-based prices to show real value of electricity
• RES generators should participate in the markets in the same way as all other generators
• Subsidies to RES-E should not be allowed to distort wood supply markets
• Security of electricity supply to energy intensive industry must be secured
• Demand flexibility should be voluntary and rewarded
• The benefits of CHP should be recognised (efficiency, cost effective, energy security, resource efficiency)
• EU should not create more bureaucracy or official bodies / authorities
Energy Union Governance
• No to a binding cap on energy consumption impeding industrial growth
• Increased mobilisation of forest biomass is essential in reaching the 2030 renewable energy target
• Need for a real focus on industrial competitiveness
• Reduction of administrative burden for business needs to be prioritised
• Need to avoid/minimise policy conflicts and overlaps
• The directive should not set a binding EU cap on energy consumption
• Member States should be allowed to set their own indicative targets
• Costs and potentials varies across Member States: there is no one-size-fits-all energy savings trajectory
• Equal footing between obligation schemes and alternative measures needs to be preserved
• Cogeneration to remain at the core of the Energy Efficiency Directive
• Support schemes should not distort wood markets and should stimulate supply of wood
• Opening up to national schemes to cross-border participation in electricity markets should lead to more market integration, not to harmonised subsidies
• Guarantees of origin should remain as trade description, not to be used as subsidies
• There is no “one size fits all” in heating and cooling: focus should be on flexibility and cost-efficiency
• Emission reduction in transport should cost-efficiently drive renewable energies in transport (RES-T) integration into the market while not resulting in transportation costs increased
• Our industry is an emerging producer of RES-T solutions mainly from wastes and residues, such as advanced biofuels, biogas, excess electricity from bio-based pulp and paper mills...
• Bureaucracy and costs should be avoided when implementing sustainability criteria
The full position paper can be consulted via the link below.