1. EPP hearing: ETS reform post 2020
Position essenscia, May 4th 2016
Els Brouwers
Head of Climate and Energy

2. The European climate objectives require a strong industry
R&D priorities of the EU
CO2-neutral buildings
Renewable energy
Sustainable transport
Manufacturing industry

3. The chemical, plastics and life science industry
Innovative solutions to tackle the climate challenge
Materials to increase battery efficiency
Improved insulation for sustainable buildings
Ultra light materials for lower fuel consumption in transport
Better performance of household applications
Innovative lubricants and coatings
CO2 as resource for the production of mattresses

4. The ETS reform: principles
Environmental measure to tackle greenhouse gas emissions
Carbon leakage protection
Free allocation is an economic measure to protect internationally competing industries
How to safeguard the EU investment climate and competitiveness of its industry, without compromising the environmental objectives?
How to avoid corrections down on free allocation through the application of irrealistic benchmarks, correction factors or tiered exposure grade, especially upfront before any need for correction has been proven?

5. -1%/year reduction of the extra correction factor
Realistic benchmarks for manufacturing industry without correction factors are key
Birkeland-Eyde electric arc method
-1%/year reduction of the
benchmark
Haber-Bosch synthesis
Steam reforming natural gas
extra correction factor
Source: Fertilizers Europe, essenscia

6. ETS Phase 3 (2013-2020) Auctioning MSR 1.900 mio Allocation
Available allowances
Linear reduction factor
-1,74%
Initial level of Free allocation
(historic activity levels and 10% best performers)
MSR
1.900 mio
Auctioning
Free allocation level with CSCF
Allocation
2013
2020

7. ETS 2021-2030: Commission proposal
MSR phase 4
1.650 mio
(87%)
Linear reduction factor -2,2%
extra correction factor
MSR Phase 3
1.900 mio
57%
Auctioning share
Free
allocation
43%
Allocation share
2021
2026
2030
Reserve for new installations and higher production
250 mio
(13%)

8. ETS 2021-2030: essenscia proposal
MSR phase 4
52%
LRF -2,2%
MSR Phase 3
1.900 mio
52%
Auctioning
48%
Allocation
2021
2030
48%
Industry reserve

9. ETS Reform: solutions are at reach…
Creation of robust reserve for allocation
Make a correct calculation of the auctioning share
Use MSR of Phase 3 to fuel economic growth
Recycle unused allocation for later years
Carbon leakage protection following the dynamic
of economic cycles
Realistic benchmarks
Free allocation based on real activity levels
A correct carbon leakage protection is the catalyst for sustainable production and growth in Europe

10. essenscia Federation of the chemical industry and life sciences VZW
Contact:
Els Brouwers
Head of Climate and Energy T