Climate change and the petrochemical industry
Do you want to reduce your carbon footprint?For every unit of greenhouse gases emitted directly or indirectly by the chemical industry, the industry enabled 2-3 units of emission savings via the products and technologies provided to other industries and consumers.
A global report on the carbon life cycle analysis of chemical products published in July 2009 by ICCA with the support of McKinsey highlights the importance of the chemical sector as a means of helping to reduce CO2 emissions through energy-efficiency and renewable energy applications. The most important applications are insulation and coating for lightweight packaging. Greenhouse gas emission savings enabled by the chemical industry are more than double the industry’s emissions.
Climate change is one of the most far-reaching environmental concerns the world faces today. While questions about the causes and consequences still remain, it is generally accepted that actions have to be taken.
The chemical industry is an energy-intensive industry in a highly competitive global environment. On average, about 9% of total production costs are due to energy use. For some petrochemicals, this ratio can rise up to 75%. Because of this, the chemical industry has already invested over many decades in energy efficiency improvement.
Whilst energy saving has been primarily economically motivated, the EU chemical industry is increasingly recognising the implications of potential actions to reduce greenhouse gas (GHG) emissions and the effects that these might have on their operations. In line with its Responsible Care approach to environment, health and safety, the EU chemical industry has taken early actions through innovation and better management to improve the energy efficiency of its processes. These actions have achieved an improvement in specific energy consumption of 30% since 1990.
Linked to certain economic and environment policy conditions, the EU chemical industry in 2001 set an objective of continuing to reduce emissions by 30% for the Kyoto basket of greenhouse gases by the year 2010 (measured in CO2 equivalents, reference year 1990).
In return for the current achievements and projected future progress, the EU chemical industry expects Member States and the European Commission to take into account the needs of industry and to provide a stable environment in which to do business. This is especially the case in the "permit and allowance" system created within the proposed EU Emissions Trading Scheme, which, whilst deliberately excluding the chemical sector, actually includes a significant proportion of it through the definition of "combustion installations".
Emissions Trading Scheme - ETS
Early 2008 the European Commission published its proposals for new climate change package for the post Kyoto period, after 2012. The mechanisms developed by the EU are known as Emissions Trading (ETS), Joint Implementation (JI) and the Clean Development Mechanism (CDM).
The current review of the ETS is causing serious concerns among chemical industries. This system is designed to price CO2 emissions, mainly by establishing an auctioning tool in order to reduce greenhouse gases by at least 20% by 2020.
The Climate Change Hurdle video
EU chemical industries fully support such an aim of reducing CO2 emissions but they do not support the current strategy. They consider the auctioning strategy as a non sustainable system since it does not take into consideration the need for European industry to preserve its competitiveness in order to remain a solution provider for the management of climate change issues.
Benchmarking based on performance is much more cost effective whilst safeguarding the EU ETS goals and EU industries competitiveness. The EU chemical industry supports benchmarking because this would provide a strong motivation for continuously improving CO2 performance while a generalised auctioning mechanism would penalise everybody, including the best performers. In addition the current draft does not provide workable criteria to check which sectors are considered to be exposed to international competition and could therefore be granted free allocations for the best performers.
Unlike auctioning, benchmark will allow the petrochemical industry to use their investment capacity to install additional emission reduction techniques while preserving an acceptable competitiveness.
On 7 October 2008, the European Parliament Environment Committee has voted on the ETS report and has accepted benchmarking as a concept for distributing allocation rights related to performances. No clarity has been given to industry about when this measure will be applicable and no reference is made to the required certainty and balance to preserve European industries’ competitiveness and jobs.
In December 2008 the EU Parliament voted the energy and climate change package according to which the 27 member states commit to reduce their CO2 emissions by 20% by 2020. Although this commitment is now to be translated legally and politically, the chemical industry now needs precise conditions for exposed sectors to encourage efficient manufacturers.
In the meantime the chemical industry prepares for the Copenhagen COP15 meeting of the United Nations Framework Climate Change Convention that will draw the lines for the post Kyoto era after 2012.For more information on climate change, click here.
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