MEPs under fire over carbon capture and emissions trading plans

Brussels - Euro Chlor, which represents chlor-alkali producers in Europe, has condemned proposals by the European Parliament's Environmental Committee (EPEC) for the funding of carbon capture and storage (CCS) technology and the third phase of the EU emissions trading scheme (EU ETS3).

The EPEC, last week, voted through proposals for a Euro-10 billion package of subsidies to kickstart a programme to build 12 demonstration coal-fired power plants employing CCS technology. The funds are to come from revenues the auctioning of pollution permits under the ETS, from 2013.

The MEPs decided that industrial operators should buy permits buy permits covering 15% of their carbon emissions in 2013, ramping up to 100% of emissions by 2020.  Under the propoals to be voted on in December, the aluminium and chemical industries would join the cement, glass, pulp and paper industries in the scheme.

 As a highly electricity intensive industry, if it is not be allocated free CO2-allowances, its competitiveness on global markets and therefore its overall future are endangered, Euro Chlor warned.

“If in Europe, our sector had to absorb the extra carbon costs passed on by the power producers, the sector would be forced to consider new investments elsewhere”, said Alistair Steel, executive director of Euro Chlor. "That is why the federation has consequently been advocating for an allocation of free CO2-allowances, based on performance related benchmarks ... In the current proposal however, none of these measures will be applicable to Chlor-Alkali, one of the most energy intensive industries."

With electricity accounting for about 50% of production costs, the Chlor-Alkali industry  is an electricity intensive industry whereby the CO2 is emitted by the power generator. This makes the sector particularly vulnerable to higher electricity prices. Many other industrial activities in Europe depend heavily on the presence of chlor-alkali producers in the region.

The sector needs certainty on the criteria to determine which sectors are exposed to international competition and may inevitably be subject to “carbon leakage", according to a statement from the chlorine industry group. The MEPS vote, it said: "misses an opportunity to create clarity for electricity intensive industries and to help preserve the basis of European economic and social stability and growth, thereby maintaining the competitiveness of its industry.

"The Chlor-Alkali industry, together with the whole of the chemical Industry, shares the European determination to tackle climate change. It has been achieving greater energy efficiency for many years and provides chemical building blocks enabling many other industries and consumers to reduce carbon emissions."