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European cement industry recognised as vulnerable to carbon leakage

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April 2009 - On 29 April the European Commission publicly confirmed that the European cement industry qualifies as a sector vulnerable to carbon leakage under the criteria laid down in the revised Emission Trading Directive. The list publicised by the Commission is based on a quantitative assessment carried out by DG ENTR which looked at 231 sectors - not only ETSi sectors - at NACE 4 level. In total, 231 sectors were assessed. 134 of these qualify as vulnerable to carbon leakage with a trade intensity above 30%. 54 sectors lie between 10% and 30% trade intensity and, for these, an increased cost of above 5% of GVA will have to be demonstrated. 43 sectors are below 10%. 11 sectors are still under assessment and no trade data was available for 16 sectors. 

As expected, the cement industry qualifies as highly vulnerable to carbon leakage with an increased cost induced directly by the ETS of 55.06% of GVA and an increased indirect cost of 4.27% of GVA. Cement is therefore well above the 30% of GVA required under the ETDi. Only three sectors qualify under this 30% of GVA criterion: cement, lime and oven coke.

The 4.27% of GVA for indirect (electricity) costs is based on less than 50% of the GVA of the EU cement industry. The European Commission will approach the Member States in order to complete the data in this respect and CEMBUREAU strongly recommends that the information be supplemented.

The recognition that the European cement industry is vulnerable to carbon leakage in the absence of a level playing field entails very significant consequences, such as free allocation on the basis of a benchmark and the possibility to include importers in the ETS as well as the possibility for Member States to compensate higher electricity prices through State aids.

On all fronts CEMBUREAU has identified appropriate actions, the most urgent of which is the definition of a benchmark through the procedure of comitology with scrutiny (see February 2009 Eurobrief).For that purpose, the European Cement Industry has collected all necessary data and developed an independent, reliable and comprehensive database, the so-called GNRi (Getting the Numbers Right), from which information is available to the European Commission, consultants and Member States. It provides current and robust data on CO2 emissions and the energy performance of the cement industry both in Europe and worldwide and is allowing CEMBUREAU to present a unique, EU-wide benchmark.

CEMBUREAU is ready to contribute to WG3 (the comitology Working Group on ETS) and welcomes, within this framework, the consultation of stakeholders initiated by EcoFys, the consultant appointed by the Commission to develop the sectoral benchmarks.