FuelsEurope’s comments on the Council conclusions on the 2030 Climate & Energy Framework

Posted on 24/10/2014 in Press Release

Brussels, 24 October 2014:  Following publication of the Council Conclusions on 2030 Climate and Energy Policy Framework, the European refining industry welcomes the Council decision to extend the measures to prevent  Carbon Leakage after 2020 and expects this to translate into 100% free allocation to cover direct and indirect CO2 emissions based on technically and economically achievable benchmarks. FuelsEurope also welcomes the Council call for a technology neutral approach to emission reduction and energy efficiency in transport and wishes to contribute to the policy debate demonstrating that the refining industry can be part of the solution.

FuelsEurope acknowledges the desire of the EU to be recognised as the world leader on GHG reduction in view of the COP negotiations on climate change. However, an unconditional and unilateral EU binding target of 40% GHG reduction by 2030 will contribute little to global reductions: unless other regions make similar contributions but it could undermine the competitiveness and future of vital industrial sectors and associated jobs in the EU.

As a consequence of the 40% target, energy intensive industries will have to cut GHG emissions by 43% (by 2030 vs. 2005). For the refining industry this is technologically and economically unachievable and – unless an adequate number of free allowances are made available –can only result in additional costs and / or production cuts.

In this respect FuelsEurope welcomes the Council’s decision to maintain free allocation after 2020 to prevent the risk of carbon leakage, as long as no comparable efforts are undertaken in other major economies. FuelsEurope especially welcomes the Council objective to protect the international competitiveness of the most efficient installations and believes that this objective will only be effective if it translates into 100% free allocation based on technically and economically achievable benchmarks, including also the offsetting of CO2 costs passed through in electricity prices.

The main focus of climate policy should be on GHG emissions reduction. As we have learned from the implementation of the 2020 package, overlapping targets on energy mix (renewables) and energy efficiency have distorting effects on the carbon price signal within the EU ETS. This undermines an optimal and cost-effective adoption of technology neutral solutions for carbon abatement, leading to rising energy costs in the EU compared to its competitors, just when the EU needs affordable energy as a condition for its industrial renaissance. FuelsEurope believes therefore that the governance system which shall coordinate at EU level the achievement of the renewables and energy efficiency targets will need to avoid the above detrimental effects.

FuelsEurope welcomes the Council support for a technology neutral approach to emission reduction and energy efficiency in transport. The refining industry, currently supplying over 90% of fuels for transport, recognises the importance of the transport policy debate which should address fuels, vehicles, customer choice and infrastructures while maintaining a single EU transport market, and FuelsEurope wishes to actively contribute to it.

FuelsEurope welcomes the Council’s declarations of the need to increase the robustness and resilience of the EU energy system and believes that an economically sustainable domestic refining industry can provide a strategic contribution to secure energy supplies for EU consumers.