Energy indicators

1
ENERGYzing the European chemical industry HLG
ChemicalsAd-hoc group Energy, Feedstock and
Logistics15 January, 2008 P Claes, Essenscia
2
ENERGYzing the European chemical industry

1. Energy is vital to the chemical industry - as raw
   material and fuel
2. Industrys essential need Access to
   competitively-priced electricity and gas
3. Impact of climate and energy policies on EU
   competitiveness
4. Energy efficiency is of prior importance for the
   industry
5. Chemical products help to save energy

3
ENERGYzing the European chemical industry

• Energy is vital to the chemical industry - as raw
  material and fuel
• Industrys essential need Access to
  competitively-priced electricity and gas
• Impact of EU climate and energy policy on
  competitiveness
• Energy efficiency is of prior importance for the
  industry
• Chemical products help to save energy

4
The chemical industry is a large energy consumer
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For chemicals, energy is more than a fuel
EU chemical industry energy consumption by source
Source Eurostat including pharmaceuticals
6
Energy costs and energy policy matter for
important building blocks of the chemical industry
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Energy is vital to the chemical industry as raw
material and fuel

• Chemical industry is the most important energy
  consumer among manufacturing sectors
• Energy serves not only as fuel but also as
  feedstock oil and gas are used as raw material
  for higher value added products.
• The chemical industry is globally active, highly
  integrated and depends on very energy intensive
  building blocks

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ENERGYzing the European chemical industry

• Energy is vital to the chemical industry - as raw
  material and fuel
• Industrys essential need Access to
  competitively-priced electricity and gas
• Impact of EU climate and energy policy on
  competitiveness
• Energy efficiency is of prior importance for the
  industry
• Chemical products help to save energy

9
EU electricity prices A disadvantage in global
competition
General Industrial Power Price (in /MWh)
EU range
EU average 45
() Estimates for the European chlor-alkali
industry
Sources Prochemics based on Information from
IEA Eurostat EIA (2006).
10
Electricity prices traded in the European
exchanges are on the rise
Increase 2001-2006 110
Source Prochemics based on Information from EEX
(electricity base prices). Note These prices do
not necessarily reflect prices paid by chlorine
producers.
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EU gas prices A disadvantage in global
competition
Global Natural Gas Costs 1st Quarter 2007(US
per million BTUs)
Germany 7.60
Russia 1.50
UK 8.65
Canada 7.10
Belarus 3.15
Belgium 8.50
Ukraine 3.60
South Korea 8.80
USA 7.20
Iran 1.25
Japan 8.70
Libya 1.00
China 6.30
Qatar 1.80
Mexico 6.85
Oman 1.00
India 3.70
Saudi Arabia 0.75
Trinidad 1.65
Brazil 4.90
Bolivia 1.85
Argentina 4.85
Source ACC
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Industrys essential need Access to
competitively-priced electricity and gas

• Energy prices are key to competitiveness
• While oil has in principle global price levels,
  electricity and gas remain national/regional
  markets (gas has the potential to become a global
  market)
• EU electricity and gas prices are a competitive
  disadvantage for EU industry

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ENERGYzing the European chemical industry

• Energy is vital to the chemical industry - as raw
  material and fuel
• Industrys essential need Access to
  competitively-priced electricity and gas
• Impact of climate and energy policies on EU
  competitiveness
• Energy efficiency is of prior importance for the
  industry
• Chemical products help to save energy

14
Competitive energy markets are essential

• EU energy markets are not competitive
• Access to grids, gas storage and cross-border
  connections for non-incumbents difficult
• Few energy suppliers dominate the markets
• Third package is an important step
• Cefic supports the EC Third Package and call for
  its rapid adoption and implementation.
• Cefic calls for improvements to the Third Package
  in key areas to ensure its effectiveness.
• Cefic calls for transitional measures until
  energy markets are competitive.

15
Electricity price largely determined by national
policies
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Climate change policies cause energy prices to
rise
Impact of CO2 costs on electricity prices
Source Prochemics based on Information from
DGEMP of the Ministiere de lEconomie, de
Finances et de lIndustrie, France (2003). Note
These prices do not necessarily reflect prices
paid by chlorine producers.
17
What drives electricity prices ?
Development of the certificate prices and
electricity prices in Germany first trading
period 2005-2006
Certificates Electricity
18
Use of renewables in the European chemical
industry
Use of renewables in the European chemical
industry as raw material (2003)
Chemical Industry 6.4 million t
Other industries 2.6 million t
74.1 million t petrochemical and about 6.4
million t renewable raw materials are used in the
EU-25 chemical industry in 2003, i.e. roughly 8
of the raw materials are renewable raw materials
Source German Agency Renewable Resources
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ENERGYzing the European chemical industry

• Energy is vital to the chemical industry - as raw
  material and fuel
• Industrys essential need Access to
  competitively-priced electricity and gas
• Impact of EU climate and energy policy on
  competitiveness
• Energy efficiency is of prior importance for the
  industry
• Chemical products help to save energy

20
Energy efficiency is not only driven by high
prices
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EU Chemical industry is leading in CO2 efficiency
gains
Chemical industry greenhouse gas emissions per
production EU versus US
22
To ensure overall GLOBAL sustainability.minimise
measures that stimulate investment leakage to
most CO2 inefficient regions
Country CO2 / GDP efficiency indexed to Japan
1.0
Data source IEA 2006
23
Global comparison EU chemical industry most
energy efficient
24
Energy efficiency is of prior importance for the
industry

• Energy and resource efficiency is a means for
  competitiveness
• The chemical industry has decoupled production
  growth and energy use (e.g. technological
  breakthroughs, diffusion of CHP)
• Timing of energy efficiency measures often
  depends on life-time of major assets rather than
  energy prices
• The European chemical industry, overall, is more
  energy and CO2 efficient than other world
  regions. The current EU ETS design encourages
  growth in carbon-intensive countries.
  Delocalisation harms global environmental aims.

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ENERGYzing the European chemical industry

• Energy is vital to the chemical industry - as raw
  material and fuel
• Industrys essential need Access to
  competitively-priced electricity and gas
• Impact of EU climate and energy policy on
  competitiveness
• Energy efficiency is of prior importance for the
  industry
• Chemical products help to save energy

26
Innovation in chemicals is contributing to fight
climate change

• Energy neutral housing
• High-performance insulation materials
• Solar panelling and photoelectric cells
• Heat-absorbing wall-board material can reduce a
  buildings energy consumption by 15 to 32

The Three-Liter House
Source BASF
27
Chemical products support other sectors to tackle
climate change

• Cutting back emissions in transport
• Energy efficient tyres lower rolling resistance
  thereby reducing GHG emissions of cars by 5
• Lightweight, high-strength plastic components
  replace metal and save weight for greater fuel
  efficiency in cars
• New jet aircrafts are making increased use of
  plastic and carbon fibre composite materials
  achieving major emissions cuts in air transport
• Making fuel cells commercially viable
• Smart coatings reduce drag through the fouling of
  a ships hull

28
Chemical products help to save energy

• Chemical industry saves energy through innovative
  solutions for downstream users. Chemical products
  save at least twice the CO2 used in their
  production.
• Curtailing growth of the chemical industry
  through absolute CO2 reduction targets harms
  global environmental aims.

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The way forward to ENERGYze the European chemical
industry

• ACTIONS NEEDED
• Competitive energy markets are essential The
  Energy Package must be strengthened, not weakened
• Beyond what the Energy Package will achieve
• Market dominance Provide guidance to national
  regulators on effective measures to prevent abuse
  of market power.
• Long-term contracts Workable guidelines on
  long-term contracts, enabling consumers to enter
  into long-term supply contracts.
• Transitional measures to allow access to
  affordable energy for energy-intensive industries
  until energy markets are competitive.

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The way forward to ENERGYze the European chemical
industry

• ACTIONS NEEDED
• As long as there is no international agreement on
  climate policy, the EU ETS design must not put
  unilateral constraints on globally competing
  industry.
• Special contribution of the chemical industry to
  energy and ghg efficiency in economy and
  manufacturing must be recognised.

31
The way forward to ENERGYze the European chemical
industry

• ACTIONS NEEDED
• Chemical industry uses renewable raw materials
  for some of its processes and is an important
  actor with regard to the development of renewable
  energies.
• EU legislation must not favour the use of
  renewable resources for energy generation over
  their industrial use
• The promotion of renewable energies should adhere
  to key principles cost-efficiency,
  sustainability, technology-neutrality
• EU legislation should provide for national
  exemption measures for energy-intensive
  industries to alleviate the cost burden and
  thereby guard international competitiveness