26.08.04  German chemical industry warns of trade distortions under ETS

The lack of consistent interpretation of the EU emissions trading scheme in the chemicals sector will lead to competitive distortions within the trade bloc, according to Helmut Rothermel, director of the German chemical industry association VCI.

Speaking to Dow Jones Newswires, he said there is no consistent interpretation of the EU ETS directive regarding the chemical industry. The Netherlands for example include the combustion activities at all chemical plants in its NAP, while France decided to exclude the chemical industry completely. Spain and Italy have taken similar approaches to combustion at chemical plants.

Although the European Commission has assessed eight NAPs so far, setting out the principles on which it will judge the rest, the issue of which installations should be included has not been dealt with since neither France, Spain nor Italy were among the first eight.

The emissions trading system will lead to high additional costs for chemical companies in Germany, Rothermel said. In Germany about 170 installations in 80 chemical companies are affected by the EU ETS. The German NAP includes only the energy producing installations of chemical plants, direct emissions from chemical processes and the utilisation of residues are not included. Those 80 companies would be hampered when competing with competitors in France if the French interpretation is allowed to persist.

Beside the cost burdens as a result of including their energy production plants in the EU-ETS, the chemical industry will also pay higher prices in future for the energy they buy, Rothermel said. The chemical industry as an energy-intensive sector currently buys about 50 percent of its demand from public electricity providers, who already announced to pass the expenses arising from the EU ETS on the electricity prices. “The chemical industry will have to pay the costs resulting from emissions trading ” Rothermel said.

Whether there will be a relocation of chemical plants as a consequence of the EU ETS is difficult to asess, Rothermel said, but regarding new investments he expects that companies will look for locations outside of Europe. This would be the case especially for investments in crackers for the production of energy-intensive base chemicals.

(bron: www.Pointcarbon.com 26 aug)

Last updated: 26.08.04