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CEMBUREAU welcomes draft Decision on Benchmarks and calls for interpretative Guidance on Allocation Rules

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Pursuant to Article 10a (1) of the Emission Trading Directive, a “Decision” on benchmarks for free allocation of allowances and other allocation rules is to be taken, through the so-called pre-Lisbon Treaty comitology procedure by a Committee composed of representatives of the Member States and the European Commission – the Climate Change Committee.

That decision was adopted by a majority of 281 votes out of 345 votes on 15 December after a high suspense negotiation in which the benchmark for free allocation to the cement industry remained in the balance until the last moment. A clear majority finally emerged in favour of an EU-wide clinker benchmark of 766 kg CO2 per tonne of grey cement clinker and an EU-wide benchmark of 987 kg CO2 per tonne of white cement clinker. Common sense thus prevailed and CEMBUREAU welcomes the Decision which still has to undergo parliamentary scrutiny in the European Parliament Committee on Environment, Public Health and Food Safety in the 1st quarter of 2011.

This benchmark will impose a very tough reduction of CO2 emissions upon the European cement industry as a result of the adoption, as a reference, of the CO2 average emitted by the 10% best performing installations in 2007-2008, a first decile clearly driven by a higher than average access to biomass in those years. Compared to the actual average emissions of the industry as a whole in the EU, an 11% reduction will be required from 2013 on. If account is taken of process emissions (some 60% of the total CO2 emissions of clinker production) which, by definition, cannot be reduced, a reduction of 30% of combustion related CO2 will in fact be required, an objective that lies beyond what can be achieved through existing technology unless, of course, an unlikely larger use of biomass is obtained. The challenge is accepted, but it should not be underrated.

The adoption of the benchmark for free allocation to the European cement industry was a relatively simple point. Other allocation rules, in contrast, address highly complex issues. In this respect, the implementation of the Decision will not be an easy task and CEMBUREAU calls for Guidelines to be produced by the European Commission to facilitate the exercise and avoid contradictions. It is indeed important to check that the rules laid down in the Decision are applied by Member States in a manner that makes technical sense in each and every sector and subsector including of course clinker production installations. A special difficulty here will be to work out a workable solution for installations or new capacity that came on stream during the Kyoto period, between 1 Janaury 2005 and June 2011 (the so-called new incumbent installations) and Phase III new entrants. Overall, however, the allocation rules strike a fair deal especially as the production volume by which the benchmark will be multiplied will be the median of 2005 to 2008 thus avoiding the trap of a calculation based on depressed production in the crisis years 2009-2010. In this respect, also the Decision is welcomed by the European cement industry.

For more details on the Allocation Rules see October 2010 Eurobrief.