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 CO2passed 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
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