VCI position in a nutshell
Climate Protection Legislation
Climate protection is a central concern for the chemical-pharmaceutical industry. With its products and through the EU emissions trading system, the German chemical industry actively contributes to achieving the 2oC target and describes in a study how the industry can technologically reach greenhouse gas neutrality in its production by 2050.
The German climate protection act adopted in 2019 provides the federal government with a framework for action to achieve the climate targets for Germany. It also sets annual reduction targets for emissions in individual sectors. Moreover, a fuel emissions trading system (BEHG) was introduced, which sets a CO2 price on fuels used in sectors not covered by EU emissions trading. This includes, inter alia, smaller industrial installations. So far, protection against carbon leakage (i.e. the shift of emissions to other countries) is not regulated in a binding manner for them.
For the chemical industry, EU emissions trading is the key instrument for achieving climate targets and maintaining competitiveness. It prescribes a legally binding path for reducing emissions and guarantees that the industries covered will reduce their emissions EU-wide by 43 percent by 2030 compared with 2005. As Germany enacts its own climate protection provisions, there is a risk of double regulation for industrial installations.
Although the BEHG stipulates that there should be no double burdens, the existing draft ordinance does not yet regulate this aspect in a satisfactory manner.
Compensation for rising electricity prices still lacking
The early end of electricity generation from coal adopted in Germany is meant to contribute to achieving this country’s climate targets. Although the act provides for measures to ensure reliable energy supplies, a compensation mechanism – to make up for rising electricity prices due to the coal phase-out – remains to be developed.
Draft for EU climate law presented
Within its "Green Deal", the EU Commission has also presented a draft for an EU climate law. Greenhouse gas neutrality by 2050 is to be laid down by law, and it is planned to raise the EU climate target for 2030 from currently 40 to at least 55 percent. The "2030 Climate Target Plan" presented at the same time and the impact assessment by the EU Commission are to pave the way for this. In addition to extending EU emissions trading to other sectors, a carbon border adjustment mechanism is to be introduced. The Commission will present a proposal in 2021 for this purpose.
THE VCI IS CALLING FOR THE FOLLOWING
- Prevent „carbon leakage“
The national emissions trading system in Germany must not lead to additional burdens on industrial installations that are already regulated under the EU emissions trading system. The draft ordinance needs to be adapted once more. Also, there must be no competitive disadvantages for installations impacted by national emissions trading. They need effective "carbon leakage" protection.
- Affordable electricity prices
A compensation mechanism must be developed for electricity price increases expected from the coal phase-out, in order to ease the burden on industrial consumers. The planned funding guideline should be implemented as soon as possible.
- Industry-friendly EU climate law and improved “carbon leakage” protection
The ambitious goals for 2030 should come with improved “carbon leakage” protection in EU emissions trading. Extending EU emissions trading to other sectors would cause massive price increases and thus lead to "carbon leakage". A carbon border adjustment mechanism is difficult in terms of trade policy, it cannot be implemented for the complex products of the chemical industry and is no adequate substitute for "carbon leakage" protection.
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