Chemical Industries Association
CIA
The CIA represents the collective views of chemical and pharmaceutical companies in the UK and advises those companies on collective matters of relevance.
ID: 33067463234-52
Lobbying Activity
Response to Revision of the EU Emission Trading System Monitoring and Reporting Regulation (MRR)
24 Jul 2020
Biomass
In the EU Emissions Trading System (ETS), biomass has hitherto been zero-rated for greenhouse gas emissions according to the UNFCCC IPCC guidelines for national greenhouse gas inventories, which guarantees consistency in international reporting. Under the IPCC guidelines, emissions associated with biomass are captured under reporting of Agriculture, Forestry and Other Land Use (AFOLU) emissions. The inclusion of biomass emissions as industrial emissions, under the EU ETS’s Monitoring and Reporting Regulation (MRR), would therefore comprise a double-counting of emissions.
Despite this, recital 4 in the current draft of the MRR proposes that the emission factor for biomass should be related to the biomass definition under the Renewable Energy Directive recast (REDII), Article 29:
- Paragraph 10: States that the date on which a biomass installation began operating is pertinent to the emissions from the biomass used as a fuel. This will distort competition between industrial manufacturers who have both invested in biomass plant to reduce their emissions.
- Paragraph 11: States that greenhouse gas emission savings, related to electricity produced from biomass, will be related to the efficiency of the installation in which the electricity is produced.
If the Commission uses biomass which is zero-rated for emissions when calculating the benchmark, but uses non-zero-rated biomass when assessing annual performance, it would result in a completely unachievable target for industry.
Biogas
Proposed revisions to Article 39 of the draft MRR (paragraphs 4-5) would establish Member State discretion on how biogas should be treated, introducing competitive distortion between installations in different Member States. Furthermore:
- Paragraph 4 (a): Relates the biogas definition to that in the REDII, which is illogical and unfairly penalises industry for the reasons given above.
- Paragraph 4 (c): Requires biogas producers and users to be connected to the same grid. Requiring this shared connection to the same gas grid is unnecessary and would disadvantage those without access to biogas. Furthermore, it could drive up the cost of biogas by incentivising production in higher cost production locations. The issue could be further complicated by the interpretation of what constitutes a ‘grid’ (e.g. transmission vs distribution networks, the role of interconnectors etc). All that should be required are certificates of origin, which prove that a unit of green gas was produced somewhere and consumed ‘virtually’, only once, somewhere else. A framework should be developed to regulate the trade of such certificates across participating countries, to facilitate uptake of biogas and avoid double counting. Any operator of an EU ETS installation should then be able to apply an emission factor of zero to biogas, if they have purchased a certificate of origin.
Carbon capture, use and storage
It is widely recognised that carbon capture, use and storage (CCUS) will be a necessary tool for both the reduction of greenhouse gas emissions and the creation of a circular economy. Despite this, the draft MRR, which will be in place until 2030, currently only allows participants to subtract from their emissions, those emissions associated with CCUS, where the final product is precipitated calcium carbonate. However, there are many other chemically stable materials which could be added to this list.
To help incentivise CCUS and a circular economy over the next ten years, the MRR should make reference to "chemically stable materials" in Article 49, paragraph 1 (b). Furthermore, Article 49 currently states that ‘The operator shall subtract from the emissions of the installation any amount of CO2 originating from fossil carbon… not emitted from the installation’. The inclusion of the word ‘fossil’ disincentivises CCUS which uses biogenic carbon, effectively disincentivising much needed activities such as bio-energy with carbon capture and storage (BECCS).
Read full responseResponse to Revising the rules for free allocation in the EU Emissions Trading System
5 Jul 2019
Energy efficiency
We welcome the Commission’s recognition that energy efficiency improvements, in the heat and fuel benchmarks, can penalise operators by reducing their free allocation. However, the way the Commission has worded Article 6 of the act, suggests that an operator would need to prove that the entire 15% change in activity level is due to energy efficiency measures. We would urge the Commission to amend the text so that the free allocation is adjusted according to the change in production only (i.e. excluding energy efficiency), in cases where the 15% activity level threshold is breached.
5% intervals
A relative approach to free allocation is critical to protect European operators, whilst at the same time preventing the oversupply of allowances in the market. We understand that the 15% threshold is established in the Directive and so will not change, however after this threshold is breached a perfectly linear relationship between free allocation and activity level should be established, to ensure the right amount of free allowances are available to European industries, to allow them to compete in an international market and to avoid carbon leakage.
The 5% interval threshold the Commission has proposed is unnecessary and unfair. For example, an operator which has an activity level increase (and free allocation increase) of 15.1% in year 1, would need a subsequent activity level increase of 5% - to get it from the “15-20%” to the “20-25%” bracket – to access more free allowances. In the meantime, they are more exposed to the rapidly increasing carbon price, which they cannot pass through to their customers.
If that same operator were to drop from 15.1% to 14.9%, they would revert to their original allocation setting. This means that a change in 0.2% on the threshold can lose an operator ~15% of the allocation due to them to cover their increasing productivity.
There is little that can be done to change the initial 15% threshold which is set by the Directive, but we urge the Commission to use a linear (or failing that a 5% interval) response to activity level changes (+/-), once an operator has breached the initial 15% threshold. The Commission has proposed the use of 5% intervals because it is concerned about administrative burden for operators and authorities. However, the same administrative burden/cost would apply to operators monitoring activity level changes regardless of whether they have breached their 5% bracket or not.
Absolute threshold
We would urge the Commission to consider introducing a parallel absolute threshold of +/- 50,000 tCO2, in addition to, but not instead of the relative threshold (i.e. +/- 15%). Using a relative threshold alone means that larger emitters are disadvantaged, as they can have significant changes in emissions without benefitting from increased free allocation.
Rolling average
In calendar years (1 Jan – 31 Dec) with zero activity, the Commission has proposed that free allocation will be set at zero. This is an exception to the rule that a two-year rolling average should be used when assessing changes to allocation. Industry has asked for an annual adjustment, but the Commission has proposed to use a rolling average. The rolling average should therefore be applied in all cases, including where there has been zero activity in a calendar year.
Timing
Verifying and submitting reports by 31st March creates a significant amount of extra work. It’s the same time frame as annual data submission, so it can be incorporated into annual reviews, but will increase the workload of operators and verifiers each Q1.
More information would be appreciated on the procedure/timing of the adjustment of the allocation, which would normally be on or after the 28th February. The delayed allocation must take place before the deadline of surrendering allowances for the year concerned.
Read full response7 Feb 2019
The UK Chemical Industries Association (CIA) welcomes the opportunity to provide input to the European Commission’s consultation on the draft Regulation (Ref. Ares(2019)141469 - 10/01/2019) on Hazardous Chemicals – new rules on classification, labelling and packaging. CIA is the trade association representing and advising chemical and pharmaceutical businesses across the UK. As a significant contributor to the UK economy (£18 billion every year), the chemical industry is at the heart of UK manufacturing underpinning key sectors from food and drink to medicines, as well as many other sectors.
CIA does not support the inclusion of titanium dioxide in the current proposed ATP since the conclusions drawn by ECHA’s Risk Assessment Committee (RAC) do not relate specifically to the intrinsic properties of the substance itself. Not only is the science under vigorous debate within the scientific community, but it is also our view that the EU’s proportionality principle has not been upheld in proceeding with the CLP route. In other words, we believe the approach to classify titanium dioxide as a carcinogen goes beyond and exceeds necessary actions to manage the issue at hand since the proposed classification only relates directly to inhalation of the powder-form. Considering also that this would primarily be applicable to workers in industry who handle titanium dioxide in this form at high quantities, CIA urges the European Commission to re-evaluate its approach. It is for these reasons that we therefore encourage the European Commission to seek further opinion from the scientific expert committees and consider using workplace health legislation as a more effective means to managing the potential exposure of workers.
The current approach will lead to significant unintended downstream consequences, not only in several industries such as coatings and cosmetics but the impact on the wider circular economy and sustainability agenda must also be considered. The potential for impacts on the waste legislation could mean a waste that is comprised of articles containing titanium dioxide needing to be re-classified as hazardous waste leading to unjustified barriers for recycling disposal. For the above reasons we therefore suggest for the time being that titanium dioxide be removed from the proposed ATP regulation, so that further consideration can be given to address the handling of this substance as indicated above.
Read full responseResponse to Amendment of the EU ETS Monitoring and Reporting Regulation (MRR)
26 Nov 2018
CIA welcomes this opportunity to contribute.
Art. 49: The draft text limits the use of CCU to the production of precipitated calcium carbonate alone (Art. 49). We would urge the EC to encourage use of CCU in other production processes. We would advocate the addition of the below paragraph (c) to Art. 49:
[ (c) transferred out of the installation and used as a feedstock for a downstream process or directly in a
product under the pre-condition that CO2 avoidance can be demonstrated by means of a robust,
standardized and objective life-cycle-criteria, that will be developed under participation of relevant
stakeholders in a transparent process.]
Recital 21:
The text should remove the requirement on operators to regularly review their monitoring methodology for improvements, instead they should simply be required to consider recommendations made by verifiers as part of the verification process.
Art. 13: “Member States SHALL allow operators and aircraft operators to use standardised or simplified
monitoring plans, without prejudice to Art. 12(3).”
Art. 14: “Each operator or aircraft operator shall regularly check whether the monitoring plan reflects the nature and functioning of the installation or aviation activity in accordance with Art. 7 of Directive 2003/87/EC, and whether the monitoring methodology can be improved UNLESS THIS IS TECHNICALLY NOT FEASIBLE OR INCURS UNREASONABLE COSTS.”
Art. 19: “…By way of derogation from Art. 14(2), the competent authority SHALL allow the operator not to modify the monitoring plan where …”
Art. 19: Installations passing on CO2 should be categorised AFTER subtracting the respective amount. In that way, the installation passing on the CO2 may fall into a lower category (tier) with a reduced administrative burden, thereby encouraging use of CO2. Monitoring requirements should be restricted to one of these two installations.
Art. 21: Remove the text “Subject to approval by the competent authority”, so that it reads: “2. The operator may combine standard methodology, mass-balance and measurement-based methodologies for different emission sources and source streams belonging to one installation, provided that neither gaps nor double counting concerning emissions occur.“
Art. 36: “2. Emission factors of fuels, including those used as process input, shall be expressed as t CO2/TJ.[ IF EMISSION FACTORS FOR CO2 ARE BEING PROVIDED BY A THIRD PARTY, SUCH AS A FUEL SUPPLIER, THE PROVIDER SHALL PROVIDE THE FACTORS ON REQUEST OF THE OPERATOR WITHOUT ANY UNDUE DELAY AND WITHOUT ADDITIONAL COSTS.]”
Art. 41: There appears to be an inconsistency between Art.s 41 and 47, in terms of the application of tiers. According to Art. 41, small emitters with annual emissions above 5,000 tCO2 in a process stream are not automatically exempt from the highest tier. Whereas Art. 47 paragraph 6 enables small emitters to use tier 1. Paragraph 6 should be adapted accordingly.
Art. 47: The following simplifications should be made for small emitters:
Change text: “1. The competent authority SHALL allow the operator to submit a simplified monitoring plan in accordance with Art. 13, provided that it operates an installation with low emissions. “
Add text: [Installations emitting less than 5,000 tCO2 per year shall receive the following simplifications from the competent authority: submission of one emissions report according to Art. 68 of this regulation only at the end of each benchmarking period for the whole benchmarking period according to Art. 10a (2a) and (2c) of the directive 2003/87/EC; all source streams are being treated as de-minimis source streams according to Art. 26 (3) of this regulation; exemption from site visits by the verifier.]
Read full responseResponse to Free allocation of emission allowances
23 Nov 2018
The ETS Directive instructs the Commission to adopt implementing acts to determine the revised benchmark values (Art. 10a(2)) and to define an approach for adjusting free allocation where there is a change in production throughput (Art. 10a(20)). The free allocation rules therefore (organised through delegated acts establishing data collection templates and guidance documents) should not pre-empt the benchmark update and dynamic allocation rules.
1. Limitation of administrative burden
1.1 Reporting period: Ensure that the data collection for the benchmarks update is limited to the relevant years 2016-2017/ 2021-2022, as foreseen in the ETS directive.
1.2 Physical products: physical products are not relevant to heat benchmark installations and these installations should therefore not be required to provide this additional information. Article 10 (5) (a) should be modified as follows: “Each of the installation’s physical products relevant for benchmarks is attributed to one sub-installation without any omission or double counting;”.
1.3 Source of heat: The source of heat is not relevant for allocation or benchmarks. Indeed, in line with Recital 21, there is no distinction in eligibility between sources of heat. Article 10 (5) (d) should be modified as follows: “for all measurable heat produced, imported or exported by sub-installations, it is documented whether the measurable heat was produced in a combustion process within an EU ETS installation, imported from other heat producing processes or imported from non-EU ETS entities;”
1.4 The total carbon: The total carbon balance is not relevant for allocation or the benchmarks. Therefore, Article 10 (5) (g) should be deleted.
2. Consistency in methodology & definitions
2.1 Fallback benchmarks: The Commission proposes to update the fall-back benchmarks to be based on the 10% best emission performers. We feel that this would undermine consistency within the scheme and ignore the reasoning behind the original benchmarks. Updating the fall-back benchmarks without taking into account resource availability would lead to a tightening of the benchmark that goes beyond what is possible at the EU scale. The 10% best performers in the heat benchmark would include those who burn zero-rated biomass. For all ETS installations to attain the benchmark it would an unsustainable fuel-switch to biomass for heat production. We would urge the Commission to maintain the existing methodology, by considering improvements to natural gas boiler technology.
2.2 Reference level should be based on median: The reference level should be based on the median average as in Phase 3 of the scheme. Therefore, references to the arithmetic mean should be replaced with median in the entire text.
2.3 Benchmark scope: The product benchmark appears to be systematically reduced by annual historical emissions stemming from waste gases flared, with the exception of safety flaring. This would constitute an undue methodology change implying unrealistic expectations concerning future efficiency performance improvements. We suggest to delete the new paragraph under Article 16 (5): “From 2026, the preliminary annual number of emission allowances allocated free of charge for product benchmark sub-installations for the relevant allocation period shall be reduced by the annual historical emissions stemming from waste gases flared, with the exception of safety flaring, […].”.
2.4 Consistency in definitions: The definition of ‘waste gases’ is restricted to gas, yet liquid waste gases are also possible under certain conditions, and are accepted in the existing definition. Similarly, the definition of ‘process emissions’ is more restrictive than the existing one. In Article 10 (5) (h) “and that they do not result from the subsequent oxidation of incompletely oxidised carbon in a gaseous state under standard conditions” should be deleted.
Read full responseResponse to Reducing marine litter: action on single use plastics and fishing gear
23 Jul 2018
CIA Response to:
“Reducing marine litter: action on single use plastics and fishing” Consultation
The UK Chemical Industries Association (CIA) concurs with the concerns raised by the European Commission on the amount of plastic thrown away by society. In our view we believe a better circular economy framework is needed than we have today that enables society to benefit from the properties plastics bring, whilst at the same time enabling their sustainable use. To achieve this there must be more circular economy thinking from the design stage, production and right through to waste management. Alongside this, societal behavioural changes are also required including measures to prevent and reduce littering and collection and sorting systems of plastics (and non-plastics). Where regulation is deemed necessary it should be backed up by weight of evidence and sound science. CIA believes all stakeholders including consumers have a role to play in helping to eliminate plastic waste, but it is only by everyone working together that we can possibly achieve this. We fully support the development of such an approach rather than policy directed at total removal of plastics from society and risk losing the benefits plastics bring to society.
Clear definitions are essential and we urge further thought is given on the definition for the term “plastic” and the term “single use”. The term “single use” may be dependent on how it is used within the life-cycle; for example, PET bottles can be repeatedly used if recycled into a new bottle. CIA defines the term “plastic” as follows.
“Plastic (two types):
- Thermoplastics are made of synthetic polymers that can be repeatedly moulded or extruded into various solid forms which retains its defined form in the intended applications (or during use).
- Thermosets are capable of being changed into a substantially infusible product when cured by heat or by other means, such as crosslinking by reaction of functional groups or by radiation and which retains its defined form in the intended applications (or during use).”
CIA is the organisation that represents chemical and pharmaceutical companies located throughout the UK. The UK chemical and pharmaceutical industries have a strong record as the UK’s manufacturing’s number one export earner (on a value-added basis) and are a provider of essential inputs to UK value chains. This includes products and technologies which are key enablers of climate change solutions and meeting other societal challenges. We therefore have a strong contribution to make both to rebalancing and greening the economy.
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Read full responseResponse to Revising the rules for free allocation in the EU Emissions Trading System
16 Apr 2018
1) Provisions for annual monitoring of production data for more frequent alignments of allocation (dynamic allocation):
- We support an even more dynamic allocation threshold (i.e. <15%) to better reflect industrial requirements for free allocation. Under allocation can be avoided in times of growth; over allocation can be avoided in case of economic crisis. Pragmatic, simple procedures are needed for monitoring and verification for installations.
- For the same reason, we strongly recommend the Commission implement an annual reporting and allocation revision cycle.
2) Process emissions
- Tightening the product benchmarks should reflect realistic efficiency improvement potentials based on actual data, so as to avoid under allocation and undue EU carbon costs. The fall-back approach should be maintained: Any tightening should be based on performance data so as not to penalise efficiency gains. Unavoidable emissions should not carry a carbon cost, as long as such costs are not also imposed outside of the EU: such costs within the EU could stimulate the undesirable relocation of emissions outside the bloc to the disadvantage of climate, jobs and growth.
3) Heat benchmark
- Product benchmarks will be updated according to data collection from ETS installations through member states. The heat benchmark (as with fall-back benchmarks in general) has never been based on the 10% best installations, and therefore has a different methodology that should be maintained. The heat benchmark must reflect the availability of technology and resources and the competitiveness of heat users within the value chain. Accordingly, the heat benchmark should again be based on natural gas as a resource and the most efficient boiler technology.
4) Product benchmark
- According to article 11(1) of the ETS Directive, free allocations given to individual installations must be calculated from the data of the years from 2014 to 2018. The reference level should be based on the median (as done in the past) to exclude non-representative years of operation.
- We have concerns with the time frames for collecting data. This is a major process that requires significant input. Information about the collection process should be made available at the earliest opportunity.
Read full response