Associação Portuguesa dos Industriais Grandes Consumidores de Energia Eléctrica
APIGCEE
Associação Portuguesa dos Industriais Grandes Consumidores de Energia Eléctrica (APIGCEE) is the Association of Large Industrial Electricity Consumers in Portugal, which is member of IFIEC Europe since 1998.
ID: 663223020624-44
Lobbying Activity
Response to Net Zero Industry Act
27 Jun 2023
We understand the objectives of the Net Zero Industry Act (NZIA) as a reply to the Inflation Reduction Act (IRA) proposed by the federal government of the United States and setting the framework for clean technologies, promoting the decarbonisation of industry and in particular energy intensive industries. But whereas in the IRA there is a well-set financing rationale, building on the federal budget making use of several federal agencies, NZIA proposes a high-level EU clean-technologies production target, but little in the way of meaningful tools to help reach this target. The financing responsibility lies mainly on the side of Member States that will have the necessary spending authorization from the Commission but not necessarily the economic clout to go along with it. In the case of IRA, the US Treasury Department will be responsible for more than 250 billion US dollars. The Departments of Agriculture and Energy, as well as the EPA (Environmental Protection Agency), will receive, altogether, 120 billion US dollars to boost several programmes dealing with environment conservation and resilience. IRA seeks, as well, to increase the revenues by setting a minimum tax of 15% on large enterprises. Unfortunately, in the EU the tax level in most Member States is already well above this target. Furthermore a 1% tax on stock buybacks is foreseen. IRA provides roughly 400 billion US dollars in federal financing for clean energy with the objective of substantially reducing CO2 emissions in USA until the end of the decade. Funding will be channelled through a combination of fiscal incentives, subsidies and loan guarantees. IRA furthermore sets guidelines imposing local consumption enforced through IRS (i.e., subsidies and incentives are allocated only if production is geared towards the american market). NZIA aims at accelerating green industry by streamlining the approval for financing of a set of strategic technologies. This definition excludes other net-zero technologies relevant to the decarbonisation of hard to abate sectors (e.g. air and maritime transport) like renewable fuels of non-biological origin (RFNBOs) and sustainable alternative fuels (e.g. bioethanol, biomethanol). It is our opinion that the proposal should be technological neutral and should not earmark the technologies that are allowed for funding. In what concerns public funding the proposal includes several ways in which projects can access to EU funding. The proposal foresees a certain target amount of revenues from the EU carbon market that countries should contribute toward implementation of the NZIA. In some Member States (e.g. Portugal) not even the indicative 25% target of revenues from the EU carbon market are allocated to the compensation of indirect emissions of CO2, therefore we are a bit sceptical of the effectiveness of this financing line. Also, NZIA should be clear regarding the expected amount of support for each project and technology depending on the achievable impact of such project and technology as determined in the assessment of the submitted application for funding. We anticipate that the attractiveness of the IRA with respect to NZIA will induce certain big European corporations to set part of their operations in the USA to benefit from the more comprehensive support package provided by IRA. We consider that the availability of subsidies until 2025 may be a timeframe too short to develop and implement the required decarbonisation projects in industry. There are licensing procedures in the different Member States that may last longer, creating bottlenecks in the implementation of NZIA.
Read full responseResponse to Revision of the Energy Tax Directive
31 Mar 2020
The Portuguese Association of High Electrical Energy Industrial Consumers (PAHEEIC) supports the decarbonisation of the economy and sees the revision of the Energy Taxation Directive as one of the tools to achieve the goal of a carbon neutral economy by 2050. PAHEEIC comprises 22 industrial sites in several industrial sectors.
The electrical energy consumption of these sites totaled 4.5 TWh, representing almost 10% of the total electrical energy consumed in Portugal in 2018. Many of these industries use electricity based process technologies. Nonetheless, some of these industrial processes still have a considerable thermal energy component input either produced by CHP, biomass, natural gas or by combustion processes using coke and residual fuels in clinker kilns. Furthermore some industries (e.g. cement) play an important role in the waste valorisation management policies, avoiding waste deposition in landfills.
Energy intensive industries have the extra burden of mobilizing resources to finance extremely high investments, implementing process modifications and at the same time competing in a global market where does not exist the same environmental constraints and the competition costs are lower, being exposed to a significant risk of carbon leakage.
The revision of Directive 2003/96/EC will provide the energy taxation signals that will boost the energy transition but at the same time should keep in mind that certain technologies like CCS, CCU or renewable hydrogen are yet very expensive technologies and are far from being competitive.
Energy transition is unavoidable and Europe has always assumed its leadership. The weight of European emissions at global level has been decreasing; therefore it is advisable to avoid excessive environmental voluntarism that would lead to emission’s reduction due to carbon leakage.
Many industrial sectors are in fact under double energy taxation, namely from energy under the Energy Taxation Directive and from carbon content resulting from direct and indirect energy combustion under the EU ETS. The revision of the energy taxation directive should keep in mind the “level playing field” required at global level in order to achieve a balanced approach with respect to tax exemptions for certain energy products like electricity, natural gas and other hydrocarbons, especially for industries that are in the EU ETS (or SGCIE - Energy Intensive Consumption Management System).
Natural gas has a significant share of the industrial energy mix and will play a key role in the energy transition phase due to its lower CO2 emission factor with respect to other fossil fuels and thus should not be excessively taxed.
A large majority of goods produced by energy intensive industries integrate the value chain of other goods with higher added value, notably in the chemical, steel and cement sectors, and are not so tradeable to consumers that are willing to pay a higher price, having in return a lower CO2 footprint. The impact on the value chain of derived goods will imply that producers with lower manufacturing costs will be selected. Certain goods produced by energy intensive industries do not necessarily convey a “sexy” image that is easily tradeable and increase the market tolerance to rising production costs. Industries that produce high end technology equipment for a target consumer with higher acquisitive capacity and sensible to design criteria can dilute additional environmental costs in their products (e.g. smartphones).
Energy intensive industries are one of the main employers in Europe being responsible for 2.6 million direct labour posts that should be kept. The strategy used by the European Commission in the revision of the Energy Taxation Directive should keep in mind the overall climate and economic goals, potential tax exemptions (avoiding fiscal distortions) and the priorities that need to be addressed, especially with the foreseeable economic slump caused by the actual worldwide COVID-19 pandemic.
Read full responseMeeting with Joachim Balke (Cabinet of Vice-President Miguel Arias Cañete)
20 Jun 2017 · Market Design