Energy is a high priority issue for the chlor-alkali industry as every industrial electrolysis is by definition an electricity intensive process.
Read more information on this process on the How is chlorine produced page
Position Paper - 23 February 2016
♦ ETS reform post 2020 - Chlor-alkali industry calls for full compensation of indirect CO2 emission costs
The European chlor-alkali industry calls for an ETS reform package that safeguards its international competitiveness and ensures regulatory certainty - in order to provide investment certainty a comprehensive EU wide solution to fully compensate indirect CO2 emission costs is needed.
- Carbon leakage is a real risk. We urgently need certainty that we are recognised as exposed to carbon leakage to prevent further investment leakage.
- Use auctioning revenues to compensate indirect emitters. Member States must use auctioning revenues to compensate indirect emitters that meet the conditions set in Art 10a (6).
- 100% compensation for indirect CO2 emission costs. Full compensation at 100% of the benchmark is required and there should be no reductions in compensation through use of an aid intensity correction factor.
- EU wide solution is needed. The proposed "Member States should adopt financial measures" need to be changed to "Member States shall adopt financial measures.
Read here the full position paper.
Contact: see bottom of page ↓
♦ Alliance of Energy Intensive Industries warns that any EU further pass-through of carbon cost impairs industry’s competitiveness
For industries exposed to international competition, product prices are determined by the international producer which sells at the lowest price. Therefore, if an EU producer would pass-through (parts of) EU carbon costs in their product prices, non-EU competitors not exposed to carbon costs would:
- either undercut EU products market prices without any disadvantage – thereby gaining market share;
- or follow the EU company’s product price thereby increasing their sales margin with respect to the EU competitors and attracting future investments;
In both cases and without proper carbon leakage provisions the competitiveness of ETS installations will be impaired, discouraging investments in the EU. This would lead to a relocation of EU production activities and investment to off-shore.
Read the full statement here (February 2016).
♦ The European Chlor-Alkali industry and the ETS Directive (Phase III)
The chlor-alkali industry is an electricity-intensive industry that is impacted by the Emission Trading Scheme (ETS) due to the CO2 cost included in the electricity price. The ability of chlor-alkali manufacturers and downstream consumers to pass on these costs is extremely limited as they are active on a global competitive market where non European manufacturers do not have these costs. This puts pressure on our industry to move out of Europe (this is called "carbon leakage")
The revised EU ETS Directive (2009/29/EC) recognises the need to avoid carbon leakage whilst at the same time fulfilling the climate change objective of reducing CO2 emissions.
Read more about EU ETS Directive on ec.europa.eu. The document The European Chlor-Alkali industry: an electricity intensive sector exposed to carbon leakage document (pdf) explains why and how the chlor-alkali industry is highly impacted by the ETS scheme.
Euro Chlor has also developed a Q & A which offers some answers to the often raised questions why the chlor-alkali industry is an industry at risk of carbon leakage and what compensation is expected.
Download the Q & A on the Chlor-Alkali Sector and the EU Emission Trading System document (pdf)
Under the revised ETS Directive Member States may compensate for additional costs of CO2 passed through in the electricity prices. These State Aid rules set the maximum compensation that Member States could provide to industries exposed to carbon leakage due to CO2 costs passed on in electricity prices (so-called indirect emitters). The chlor-alkali industry, as part of the sector "basic inorganic chemicals" (according to NACE 2413), has been recognized as one of the exposed sectors.
Euro Chlor also contributed to the revision of the carbon leakage list for the period 2015 to 2019. As expected, the chlor-alkali industry was considered an exposed sector.
Euro Chlor now focuses on the issue related to the post-2020 carbon leakage provision under the ETS which is currently under discussion by the Commission. Euro Chlor’s main concern is that a harmonised EU-wide compensation scheme for electro-intensive industries should be put in place.
Science and Regulatory Affairs Director
tel. +32 (0)2 676 72 47