ETS Phase III. 2013-2020 overview

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ETS Phase III. 2013-2020 overview
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(No Transcript)
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The rules for determination of the quantity of
emission allowances

• Community-wide quantity of emission allowances in
  2013 will be calculated
• E 2008 - community wide quantity of allowances
  issued in 2008 on the bases of NAPs approved
  by the Commission
• Enew independently verified data of new sectors
  in ETS (to be published in 2010)
• Community-wide quantity of allowances will be
  reduced by 1,74/an. from 2013
• E2014 E2013 x 0,9826

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Emission allowances for companies

• Community-wide quantity of allowances will be
  split into 2 categories
• For free allocation for companies in sectors
  eligible for some quantity of free allowances
• For auctioning these will be split between
  Member States (MS) according to a rule specified
  by the directive proposal.
• The Commission will adopt Community-wide and
  fully harmonised measures for allocating all
  allowances using benchmarks .This means that
  formulas to calculate the quantity of allowances
  for companies in different sectors will be
  elaborated (sectoral caps).
• Sectors will be split into 3 category
• Power sector 100 auctioning no free
  allocation
• Energy Intensive Industries (EII) exposed to
  international competition 100 of the allowances
  calculated on the bases of the formula of the
  Commission (point 4) will be allocated free
• Others 80 of the allowances calculated on the
  bases of the formula of the Commission (point
  4) will be allocated free in 2013, 20 should be
  obtained by auctioning, free allocation will
  linearly decreased to 30 by 2020.

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Energy Intensive Industries exposed sector
criteria

• At the latest by 31 December 2009 and every 5
  years thereafter the Commission shall determine
  the sectors or sub-sectors
• Products deserving free allocation of emission
  rights should demonstrate the Carbon Leakage
  ratio
• CO2 footprint (kg) / per of gross value added
  (GVA) exceeds a given threshold (1 to 4) or that
  the ratio
• CO2 costs ()/ production costs or alternatively
  /gross value added exceeds 5
• Exposure cost criteria were determined assuming a
  CO2 cost of 30 /ton
• And meet the criteria

or
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Carbon Leakage Ratio
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Distribution of allowances for AUCTIONING between
Member States

• 88 according to the relative share of emission
  scheme of 2005
• 10 for solidarity and growthstates where income
  per capita is still significantly below the
  Community average and whose economies are in the
  process
• 2 the GHG emission in 2005 was min. 20 below
  Kioto Protokoll
• It shall be for Member States to determine the
  use of revenues generated from the auctioning of
  allowances. At least 50 of the revenues
  generated from the auctioning of allowances
  should be used for given purposes.

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Allowances ratio (national level)
Non exposed sectors
Exposed sectors Free allowances based on
benchmark and emission reduction from 2013
-1,74 /year to 2020.
From 2027 no free allowances.
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Legislative timeline

• Dec 2009 Comission determines exposed sectors
• 2H2009-2010 Comitology procedure
• Implementation questions debate with sectors and
  experts
• CEFIC Advocacy
• June 2010 Rules of Auctioning
• December 2010 adoptation of implementing measures
  for allocating free allowances (i.e. benchmark
  methodology)
• 2011 Codession

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Back stairs/uncertainity in legislation

• Given that it anticipates a positive outcome to
  the COP 15 negotiations to be held in Copenhagen
  in 2009, the European Union should begin to
  prepare tougher emission reduction targets for
  2020 and beyond and should seek to ensure that,
  after 2013, the Community scheme allows, if
  necessary, for more stringent emission caps, as
  part of the Union's contribution to a new
  international agreement.
• Increasing reduction target to 30 by 2020
• Revision of exposed sectors and free allocation
• Member States may also adopt financial measures
  in favour of sectors or sub-sectors determined to
  be exposed to a significant risk of carbon
  leakage due to costs relating to greenhouse gas
  emissions passed on in electricity prices, in
  order to compensate for those costs and where
  this is in accordance with state aid rules
  applicable and to be adopted in this area.
• The list of exposed sectors may be supplemented
  after completion of a qualitative assessment,
  taking into account, the following criteria
• the extent to which it is possible for
  individual installations in the sector and/or
  subsector concerned to reduce emission levels or
  electricity consumption,
• market characteristics (current and
  projected),
• profit margins as potential indicator of
  long-run investment and/or relocation decisions

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Benchmark principles

• In defining the principles for setting ex-ante
  benchmarks in individual sectors or sub-sectors,
  the starting point shall be the average
  performance of the 10 most efficient
  installations in a sector or sub-sector in the
  Community in the years 2007-2008. The Commission
  shall consult the relevant stakeholders,
  including the sectors concerned
• It is the base of calculating free allowances
  both for sector and company

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Energy Study Team benchmark work

• Cefic Energy Study Team created a CO2 benchmark
  questionnaire for olefin plants
• The benchmark analysis made by Solomon
• Average of TOP4 olefin free allocation ?
  choosing the best curve for us
• Review the questionnaire - especially the TOP4
  (so good data)
• endorse as the final method at the Board meeting
  of April 23
• send out (a new) questionnaire May 2009
• It is necessary to develop a specific work plan
  to review the questionnaire and run the official
  performance curve then verify data and results by
  third party. This should be finalized before end
  of 2009. The benchmark curve will be based on ALL
  installations presenting each train independently
• Benchmark must be made based on 2007-2008 data
• Find common agreement on coverage of
  petrochemicals
• EST discussed and proposed to broaden HVC to
  include raffinates, isobutylene, cyclopentadiene,
  acetylene etc. The list should be developed
  (Europia and IEA)

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Assumptions

• CO2 Benchmark perimeters
• Cracker only
• Furnace(s)
• Separation
• Other facilities
• WHB (Waste Heat Boiler)
• Boiler / CHP (all heat producers)
• Boilers
• CHP (Combined Heat Power) only heating
• Other heat sources

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Benchmark analysis

• Based on 2007-2008 data
• TOP4 2008 data is missing
• Selected HVC (High Value Chemicals) as divisor
• Selected direct emissions direct indirect
  steam
• CO2 cost is 30 Euro/ton (calculated with 300
  HUF/EUR)
• Cracker exposed
• Boiler not exposed

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Perimeter
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TVK-2
TVK-1
SPC
SPC
TVK-1
TVK-2
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TVK-2
TVK-1
TVK-1
SPC
SPC
TVK-2
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Petchem CO2 benchmark 2007(teljes site-ra
vásárolt kvóta)
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Open issues of benchmark

• Perimeter
• The volume ( although fixed for 2013 2020 )
  based on which period
• Decide of the reference year for HVC
• 3 best years of 2004-2008
• 1 best year of 2004-2008
• Rolling average

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Comitology timeline for benchmark setting
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APPE Board Teleconference 16 Marchdraft agenda

• Object to review the results of the benchmark
  analysisand the outcome of the ETS impact
  assessment (this lead to measurement of the risk
  of carbon leakage) both above
• Aspects
• A) Scope of products covered by ETS and selection
  of products eligible for free allocation of
  emissions with a benchmark and without benchmark
• B) Strategy to promote our method and to ensure
  the largest coverage of substances deemed to
  receive free allocation of emissions
• C) Adjustments needed in the benchmark
  methodology to cover the range of substances
  decided under A
• D) Main positions to advocate during comitology
  procedure
• E) Next steps - timing - resources.

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Scope of products covered by ETS

• Base principles of the extension to
  Petrochemicals
• Want to cover 100 of the petrochemicals
  emissions
• Avoid auctioning or non-ETS classification
• Want to keep it simple
• Minimize benchmarks (like steamcrackers)
• Use reference values where appropriate
• Trade simplicity/less accuracy versus auctioning
  cost alternative

• The definition of petrochemicals in the ETS
  directive
• Production of bulk organic chemicals by
  cracking,reforming, partial or full oxidation or
  by similar process, with a production capacity
  exceeding 100 t/day
• What is the APPE definition (proposal to be made
  to the APPE board )
• APPE Petrochemicals are defined by the production
  of all products of steamcracker/PDH units and the
  associated chemicals and polymers based on those
  products which use a significant amount on a mole
  basis of one or more of the steamcracker/PHD
  products.
• This means that the APPE petrochemicals are
  defined around the steamcracker/PDH units. (See
  next slide)
• Currently 24 products have been identified under
  APPE Petrochemicals.

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APPE definition of Petrochemicals
Butanols ? Plastizers ? Melamine ?
Polyethylene (kT) 12.200

• Petrochemicals list

MEG (kT) 10.200
Ethylene (kT) 21.600 GVA? CO2 Trade

1. Crackers/PDH
2. Aromatics from crackers
3. Cyclohexane
4. Aniline ( including nitrobenzene)
5. Para-Xylenes
6. PTA/DMT
7. Butadiene
8. PE (LD,LL,HD)
9. PP
10. PS
11. PVC
12. EO
13. MEG
14. VCM ( including EDC)
15. Styrene (including EB)
16. Acrylonitrile
17. Cumene
18. Phenol
19. Acetone

Ethylene-oxide (kT) 2.800
PUR
MDI
EDC (kT) 10.200
VCM (kT) 10.200
PVC
EPDM
Polypropylene (kT) 9.400
Caprolactam
Phenol (kT) 2.300
Propylene (kT) 10.900 (1)
Cumene (kT) 3.000
Acetone (kT) 1.500
PUR
Propylene-oxide (kT) 2.300
TDI
Acrylonitrile
2-ethylhexanol
Raw C4
Butadiene-polymers
butadiene (kT) 2.200
EB/SM (kT) 5.500 (2)
PS
Benzene (kT) 5.100 Toluene (kt)
2.100 Mix-xylene (kt) 4.250 P-xylene (kt)
2.210
Cyclohexane (kT) 1.050
PTA/DMT(kT) 2.800
Polyesters
Nitrobenzene/Aniline (kT) 1.200
APPE Petrochemicals

1. Excluding propylene from refinery 4.600
   kTExcluding benzene ex-refinery ( 2.100 kT )

Chemicals
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APPE Petrochemicals and Exposure (Nace codes
link)Link of APPE petrochemicals with Nace code
3 4 level

• Sector exposure needs to be proven at Nace code
  level 3 or 4
• Scope of both is very broad and they cover a
  very high number of products
• Estimate that more than 1000 products fall under
  Nace code 3
• About 210 products fall under the petrochemicals
  Nace code 4 combination
• It is understood that is is not needed that for
  all products falling under the chosen Nace codes,
  performance/reference values will need to be
  determined.
• The Nace code 3 ( 241) is very well suitable for
  Chemicals. Only 3 out of 7 Nace code 4
  subdivisions of 241 are needed for APPE
  petrochemicals coverage
• 2411 Industrial gases
• 2412 Dyes pigments
• 2413 Other inorganic basic chemicals
• 2414 Other organic basic chemicals (200
  products)
• 2415 Fertilizers and nitrogen compounds
• 2416 Plastics in primary forms (11 products)
• 2417 Synthetic rubber in primary forms (2
  products)
• APPE intended to determine the exposure criteria
  on Nace code 3 level only. It is understood that
  exposure and performance/reference value
  determination need to not be aligned.
• EST requests to perform exposure validation also
  at the 241424162417 level

APPE PETROCHEMICALS
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Exposure perimeter is broader than performance
perimeter No issue anticipated due to limited
performance/reference value perimeter versus
exposure perimeter

• Petrochemicals performance/reference values
  determination will related to following Nace codes

1. 2414 (203 subcodes present)
2. 24.14.11.30
3. 24.14.11.40
4. 24.14.11.50
5. 24.14.11.65
6. 24.14.12.13
7. 24.24.12.23
8. 24.14.12.25
9. 24.14.13.43
10. 24.14.12.45
11. 24.14.12.47
12. 24.14.12.50
13. 24.14.12.60
14. 24.14.12.70
15. 24.14.13.71
16. 24.14.23.10
17. 24.14.23.20
18. 24.14.24.15
19. 24.14.73.50

• Petrochemicals exposure determination perimeter

1. Code 3 241
2. Code 4 241424162417

EST Preferred exposure criteria Since exposure
and performance/reference perimeter are more
aligned
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APPENDIXES
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Open/unclear issues for CEFIC 1.
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Open/unclear issues for CEFIC 2.