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CEPI's response to EU Commission's Preparation of a new Renewable Energy Directive for the period after 2020
In its Energy Union Framework Strategy, the Commission announced a new renewable energy package for the period after 2020, to include a new renewable energy directive (REDII) for the period 2020-2030 and an updated EU bioenergy sustainability policy. This consultation covered the REDII aspects. You can find the fully completed consultation here.
Here are some highlights:
CEPI believes that the RED has been successful in deploying large volumes of renewable energy sources. However, the costs directly and indirectly associated to such deployment in most Member States have been quite significant. The energy
prices gap with competing economies has widened, with policy-induced costs being particularly relevant in electricity prices. This has a negative impact on industrial competitiveness, as acknowledged by the 2014 Commission Guidelines on State aid for environmental protection and energy 2014-2020. Weather dependent renewable energy, solar and wind, is remarkable and growing challenge to secure availability of electricity.
The RED has also led to measures promoting the demand for bioenergy, not sufficiently taking into account the availability of wood for the wood processing industry, which is producing substitutes to fossil fuel based and more carbon intensive products. This negative impact on the competitiveness of the wood processing industry is hampering the uptake of the bio-economy and
its climate change mitigation potential. Support to bio-energy should rather focus on stimulating the supply of wood.
Member States have a responsibility to ensure that additional demand for bioenergy is met by supply of raw materials, taking into account local biomass availability. Therefore demand-side measures should be balanced with supply-side measures to mobilise existing additional potential of wood that can otherwise not be used for wood and fibre based products. Reference could be made to the biomass mobilisation brochure jointly developed by DG AGRI, Forest-Europe and the UNECE-FAO.
The EU ETS reform, published on 15 July, presents several positive elements that contribute to improving the predictability of the regulatory framework. However, these improvements are not yet sufficient in protecting the competitiveness of energy intensive industries, ensuring adequate regulatory stability and predictability, and in stimulating investments in low-carbon technologies.
From 2005 to 2014, our industry has reduced carbon emissions by 26%, resulting in 21% carbon-intensity reduction. We have been early-movers in low-carbon investments and have plans to grow our business in Europe, building synergies with circular economy and the bioeconomy.
To bring environmental protection in line with industry competitiveness, we ask to:
1. Remove artificial cap on free credits to industry.
Artificially capping access to free credits depresses future investments: it means acceptingdeindustrialisation as a legitimate way to reduce emissions in Europe, even if this wouldincrease Europe’s carbon footprint in the world.
The artificial cap will also lead, sooner or later, to the application of the cross-sectoralcorrection factor (CSCF). This is the most unfair among all instruments, as it cuts allocationirrespective of industry potentials, neutralises carbon leakage provisions, limits predictability,and punishes investments made by early movers.
2. Keep the proposed approach to benchmarks review, but improve key design aspects.
The benchmark review needs to predictably promote and reward investments in low-carbontechnologies, while finding the right balance between accuracy and administrative burden.Reducing benchmarks at achievable paces, with rules clearly stated upfront, will lowerregulatory risks and reward the installations who will invest in low-carbon technologies.
Looking at the administrative burden, the pulp and paper industry, with more than 700installations in the ETS – 60% of which below 25kt – emitted just 31.6 MtCO2 in 2014.Roughly 1.4% of total ETS emissions. Yet, it is the 2nd biggest sector for number ofbenchmarks (11), covering only about 50% of industry production – the rest being under theso-called fall-back approach. It is self-evident that opting for a full review of benchmark valuesinstead is disproportionately costly while only delivering marginal accuracy improvements.
This is why we look favourably at the approach proposed by the Commission. However, manyparameters need to be reviewed and/or clarified, starting with:
•Linearity of the reduction factor;
•Disruptive impact in moving from one reduction pattern to the other;
•Avoid/reduce administrative burden in data collection and verification;
•Fairly assess progresses for installations in fall-back approaches.
3. Grant to all energy-intensive industries equal protection against present and futurerisks of carbon leakage.
Industry is either exposed to global competition or not: there is no middle ground. In thiscontext, the Commission proposal seems reasonable. Moreover, it is worth noticing that therest of the world does not impose comparable costs on energy intensive industries, withcarbon leakage provisions appearing also in other non-EU countries.
4. Adopt binding EU rules for compensation of indirect carbon costs.
Indirect carbon costs affect industrial international competitiveness as much as direct carboncosts do. The principle of equal treatment in shielding industry from both carbon costs musteffectively and consistently apply in all Member States.
5. Stop penalising investments in industrial Combined Heat and Power (CHP).
In the pulp and paper industry CHP is considered as Best Available Technique. Installations are therefore expected to use this technology. Today however the EU ETS does not send the right investment signal to invest in industrial CHP: the EU ETS grants no free credits for electricity produced and no consistent and adequate compensation for indirect carbon costs is given across Europe either. Given the relevant co-benefits CHP delivers in moving Europe towards a low-carbon economy, corrective measures to provide the right investment signal are urgently needed.
6. Earmark innovation and modernisation funding to energy intensive industries.
The earmarked 450 million allowances is the largest industry innovation fund ever. To deliverits full potential it should be linked to the goal of 2050 sectoral roadmaps, and aimed at thedeployment of new technologies for each Annex I sectors. The modernisation fund should alsoprimarily support low-carbon technologies in industry.
For more information, please contact Nicola Rega, Climate Change and Energy Director, at firstname.lastname@example.org, mobile: +32 485 403 412
The International Council of Forest and Paper Associations (ICFPA) today released its statement on climate change ahead of the UN Framework Convention on Climate Change meeting (COP21) in Paris, France. The statement presents the contributions of forests and the forest products industry to the mitigation of global climate change and calls on governments to recognize these contributions. The full statement is available at: http://bit.ly/1MPD7ax.
The ICFPA will elaborate on the forest products industry’s efforts at a COP21 side-event – “Assessing transparency and ambition in the land use and forestry sector”, held at the EU Pavilion on December 1 at 2:30 pm. The side-event will be hosted by the ICFPA and the EU Joint Research Centre.
“Forests and the global forest products industry have a key role in helping to mitigate climate change. A low carbon economy has to consider the forest industry as a contributor to climate solutions”, said Marco Mensink, Director General of the Confederation of European Paper Industries (CEPI). “With this policy statement, we are encouraging national governments to recognize and foster all positive contributions that forests and forest products provide in combating climate change.”
The industry has made significant contributions to mitigate climate change. In addition to greenhouse gas (GHG) removals and stocking carbon in products, ICFPA members have achieved an impressive drop in their GHG emissions intensity: 5 percent since 2010/2011 and 17 percent since the 2004-2005 baseline year, as shown in the ICFPA 2015 Sustainability Progress Report (2013 data).
The statement calls on governments and the parties to the UN Framework Convention on Climate Change to recognize sustainable forest management and reforestation activities for their contribution to the global climate effort, as well as the recognition of the efforts and achievements of the forest products industry to mitigate climate change, including the carbon neutrality of biomass harvested from sustainably managed forests and the need to provide for market-based mechanisms capable of valuing mitigation actions to incentivize the industry’s potential contribution.
The ICFPA’s statement is the latest in a series of policy statements underwritten by its members associations. All ICFPA policy statements are available at icfpa.org/resource-centre/statements.
The ICFPA serves as a forum of global dialogue, co-ordination and co-operation. Together, ICFPA members represent over 90 percent of global paper production and more than half of global wood production. For more information, visit icfpa.org.
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The Juncker Commission today launched the largest industrial policy decision it will take in its entire mandate, with the new proposal for the EU Emission Trading System. The proposal has a number of good elements but falls short in its protection of energy intensive industries. Member states hold the key to the solution.
In October 2014 the European Council recognised that measures to protect energy intensive industry from carbon leakage should be maintained when revising the EU ETS. The Council concluded the most efficient installations in sectors such as the pulp and paper industry should not face undue carbon costs that would impact their global competitiveness.
Member states however added expectations on the revenues they want from the EU ETS. Today’s proposal therefore fixes the share of auctioning vs. the share of free allocation. “The proposal shows the member states cannot have their cake and eat it. If policy makers in Brussels and the member states are serious on growths and jobs, the fixed share of free allocation should be changed to really protect industry as agreed by the Heads of State”, said Marco Mensink, CEPI Director General.
CEPI does appreciate the focus on low carbon investments and support for technology and innovation in the new proposal. The use of more accurate production data is good, even though the proposal could be more ambitious. CEPI also believes the linear reduction of the benchmarks used for free allocation is reasonable and improves predictability.
The proposal does however not solve the lack of free allocation for Combined Heat and Power Plants in Europe, which has been an additional factor in closing down very carbon efficient gas-fired energy plants in Europe. The pulp and paper industry is a leading CHP sector, producing over 50% of its electricity consumption by itself.
Finally, the proposal strengthens the focus of member states on compensation for higher electricity costs to industry, but does not lead to a harmonised EU approach, which is what the internal market requires. Member States have to align their compensation schemes, so industry is treated equal across Europe.
The European Pulp and Paper Industry is a globally competing sector, with over 700 installations covered by the EU ETS. Total sector fossil CO2 emissions were 31 Million tonnes in 2014, already reduced from 43 Million tonnes of CO2 in 2005. The sector has a clear focus on breakthrough technology programmes through its 2050 Low Carbon Roadmap for the Forest Fibre Sector. “Sufficient carbon leakage protection is essential, especially for sectors that want to invest in low carbon technologies in Europe. In order to reduce emissions, we need to be attractive for investments”, concluded Marco Mensink. CEPI calls upon the policy makers to rethink their approach.
For more information, please contact Marco Mensink at email@example.com, mobile +32475769388
Note to the Editor
CEPI aisbl - The Confederation of European Paper Industries
The Confederation of European Paper Industries (CEPI) is a Brussels-based non-profit organisation regrouping the European pulp and paper industry and championing industry’s achievements and the benefits of its products. Through its 18 member countries (17 European Union members plus Norway) CEPI represents some 505 pulp, paper and board producing companies across Europe, ranging from small and medium sized companies to multi-nationals, and 920 paper mills. Together they represent 23% of world production.