EU policy

In November 2018, The European Commission (EC) published a strategy for 2050 entitled “A Clean Planet for all – A European strategic long-term vision for a prosperous, modern, competitive and climate neutral economy”. One of the main element of EU policy for reducing greenhouse gas emissions (GHG) cost-effectively is the EU emissions trading system (EU ETS) that was set up in 2005 and has been revised several times since. The last time was in 2018.

The EU 2050 strategy does not intend to launch new policies but analyses different GHG reduction scenarios, in line with the Paris Agreement. The EC does not propose, at this stage, to revise 2030 targets. However, the EC has expressed a clear preference for a carbon neutrality scenario by 2050. According to such scenarios, most GHG emissions reductions would take place between 2030 and 2050. For the chemical industry, the Commission concludes that deep emissions reduction would require change of feedstock, application of CCS and CCU technologies and increased recycling.

The EU ETS works on the ‘cap and trade’ principle. A cap is set on the total amount of certain greenhouse gases that can be emitted by installations covered by the system. The cap is reduced over time so that total emissions fall. Within the cap, companies receive or buy emission allowances, which they can trade with one another as needed. In 2018, the European institutions revised the legislative framework of the EU ETS for the next trading period (phase 4 – 2021-2030) in order to meet the EU’s 2030 emission reduction and Paris Agreement targets. By 2030, the sectors covered by the EU ETS must reduce their emissions by 43% compared to 2005 levels.

Our view

Cefic and Petrochemicals Europe congratulate world leaders for the signature of the Paris agreement. The European (petro-) chemicals industry contributes to reaching its goal by reducing continuously its own GHG emissions and by enabling other industries to become greener.

The European chemicals industry has a strong record of cutting its GHG emissions. The European chemicals industry has decoupled decouple its GHG emissions from production growth. From 1990 to 2016, it reduced its GHG emission by 60,5% while increasing its production by 85%. Furthermore, the European (petro-) chemical industry is the key enabler industry to allow other industries to reduce their proper carbon footprint. Products derived from petrochemicals also enable downstream users to innovate in low-carbon technologies such as windmills, solar panels, insulation materials and electric cars.

The EC long-term strategy for 2050 requires technological innovations (change of feedstock, application of CCS and CCU technologies and increased recycling) to cut GHG emissions in the chemical industry. Cefic considers that this means that the chemical sector needs access to significant amounts of affordable low carbon electricity, access to a modern infrastructure and financial mechanisms to support innovation.

Thanks to its outstanding performance, the European (petro-) chemical industry participated actively in the discussion on the future of the EU ETS. Petrochemicals Europe welcomes the initiative since a market-based mechanism like the EU ETS can deliver carbon emissions reduction at the lowest possible cost.

From 1990 to 2016, the chemical industry reduced its GHG emission by 60% while increasing its production by 85%.