JOINT DECLARATION
of the Energy-Intensive Industries in Germany

1 October 2008

EU Directive – Emissions Trading

A danger to the competitiveness of the energy-intensive industries in Germany

An implementation of the draft Emissions Trading Directive in the form as proposed by the EU Commission would cost the energy-intensive industries in Germany over 7 billion euros per annum in the year 2020. Many companies competing with businesses from outside Europe would be unable to absorb this shock of rising costs. For this reason, industries manufacturing construction materials, glass, chemicals, paper, metal and steel – i.e. those industries which have already made major contributions to climate protection – are jointly addressing politicians and the general public.

According to the proposal of the EU Commission, companies will have to purchase greenhouse gas emission allowances by auction. Full auctioning is planned as early as from 2013 for electricity generation installations. In 2013 industry is intended to initially purchase 20 percent of the allowances needed for production installations. The auctioning share of industry is planned to increase stepwise to 100 percent by 2020.

Auctioning causes costs of billions of euros in two ways: Companies must purchase emission allowances by auction, and they must pay clearly more money for electricity needed in their production activities. This is because energy suppliers will pass on to their customers – over electricity prices - the costs that they themselves incur for purchasing allowances by auction. Energy-intensive industries are unable to act likewise: They compete with non European businesses which do not need to observe comparable climate protection rules and, consequently, do not have to bear similar costs.
The EU Commission is considering a free-of-charge allocation of allowances for energy-intensive industries engaged in international competition. But it is totally unclear which companies will be granted this form of relief and to what extent. The Commission will decide this question in 2010 at the earliest. Companies have no planning security before then.

Avoid one-sided burdens

The planned auctioning of emission allowances threatens the competitiveness of the energy-intensive industries, without making an additional contribution to climate protection. Therefore, the energy-intensive industries advocate rules which, firstly, do not further reduce the competitiveness of impacted companies and, secondly, benefit climate protection.

For these reasons, the energy-intensive industries in Germany have the following demands:

•      Free allocation of allowances – based on benchmarks – for all installations of the manufacturing industry (including installations for combined heat and power/CHP and the conversion of process gases into electricity). This is no undue kindness to companies, because benchmarks lay down ambitious standards for the lowest possible emissions. Where companies do not meet these standards, they must additionally purchase emission allowances or make further investments.

•      Energy-intensive companies must be compensated for rising electricity prices attributable to emissions trading.

•      These rules must be decided now, within the amendment to the Emissions Trading Directive. Their concrete shape cannot be left to the EU Commission at a later stage.

Great importance to national economies

The energy-intensive industries in Germany

•      achieve annual sales of over 300 billion euros – or just under 20 percent of sales of the entire manufacturing industry;

•      employ around 875,000 persons – or ca. 14 percent of staff of the manufacturing industry;

•      invest annually over 10 billion euros in Germany and spend every year roughly 15 billion euros on energy;

•      would – even with a conservatively estimated allowance price of 35 euros – be burdened annually with just under 4 billion euros as early as in 2013 and with over 7.2 billion euros in 2020.

The energy-intensive industries stand at the beginning of the industrial value chain and hold a key position within the manufacturing industry. They manufacture aluminium, copper and zinc, insulating materials and plastics, paper, glass and steel or concrete, lime and ceramic goods. Thus they supply indispensable materials for the automotive, aircraft, electrical, printing and packaging industries and also for mechanical engineering and construction. If the manufacture of these products is no longer rewarding in Europe due to the burdens arising from emissions trading, the further value chain is threatened, too.

The energy-intensive industries have already invested considerably in modern production technologies, making major contributions to climate protection. Between 1990 and 2006 they reduced CO2 emissions by altogether 20 percent. Furthermore, their products help protect the climate in many fields: Energy-efficient buildings, vehicles and household appliances as well as installations for the generation of renewable energies become possible in the first place only with materials from the energy-intensive industries. Competitive framework conditions are needed if these materials are to be manufactured in Germany also in the future.