EU Climate Policy and Emission Trading: Challenges for the European Fertiliser Industry

Keywords: Emission trading scheme, ETS, climate change, N₂O, best available technique, BAT, benchmarking, agriculture, greenhouse gas, GHG, good agricultural practice, GAP.

The European Union targets for a 20% reduction in greenhouse gases (GHGs), a 20% improvement in energy efficiency and a 20% share

for renewable energy by 2020 are very ambitious. The European fertiliser industry understands these goals and is making every effort to contribute to their achievement. This paper discusses the impacts that the renewed Emission Trading Scheme 2013-2020 would have on the European fertiliser industry.

In the absence of an international binding agreement that levels the playing field for carbon reduction, only a 100% free allocation of emission rights based on agreed industry benchmarks can safeguard the competitiveness of the European fertiliser industry and prevent significant carbon leakage. Importantly though, the levels of these benchmarks, to be set by the end of 2010, will be very ambitious and the authors’ investigations suggest that many ammonia/nitric acid plants currently operate above the benchmark level and as a result a large part of the European industry will need to purchase considerable emission allowances.

Similarly, in the face of a world food shortage, Europe needs to maintain sufficient self-reliance in food production and in its main farm inputs. It should not endanger the existence of its own fertiliser industry and depend on external fertiliser sources from Russia, North Africa or the Middle East. In the absence of a binding international agreement on global GHG reduction, emissions trading should not become such a burden for the European fertiliser industry that it loses its competitiveness and viability. EFMA is closely working with all the relevant authorities to reach a sensible and fair solution.

Renso Zwiers, Hans van Balken, Esa Härmälä, Christian Pallière and Mark Cryans, European Fertilizer Manufacturers Association (EFMA), Avenue E Van Nieuwenhuyse 6, B-1160, Brussels, Belgium.

19 pages, 6 figures, 2 tables, 2 references.