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