European Emissions Trading Scheme Phase III and the EU Fertiliser Industry

Keywords: ETS, GHG emissions, greenhouse gases, nitrous oxide, carbon trading, carbon leakage, impact assessment, abatement.

The European Union has embarked on an ambitious programme for GHG emissions reductions, with a goal of 20% reduction by 2020 with respect to 1990 values. The cornerstone of this programme is the Emissions Trading Scheme (ETS), a ‘cap and trade’ scheme applied to energy intensive industries. In 2013 it will enter its third phase, ETS III, which will for the first time include the fertiliser industry.

ETS III provides for ‘free allocation^x‘ of allowances up to benchmarks being calculated as the average greenhouse gas performance of the 10% best performing installations in the EU. Related to the fertiliser industry, the final agreed benchmark levels for the greenhouse gases carbon dioxide (CO₂) and nitrous oxide (N₂O) are 0.302 t CO₂-equivalents/ t HNO₃ (0.974 kg N₂O/t HNO₃) for nitric-acid (HNO₃) and 1.619 t CO₂/t NH₃ for ammonia (NH₃), which translate as approximately 85% and 20% reductions respectively.

With ETS III the fertiliser industry in Europe is entering a very challenging era. However it is expected that the deployment of clean technologies across Europe augmented by measures to alleviate carbon leakage will assist in maintaining the competitiveness of the European industry.

A ‘Roadmap for moving to a competitive low carbon economy in 2050’ was recently launched by the European Commission and signals an increased focus on the possible reductions in the agricultural sector. The Roadmap acknowledges that policies to tackle food security and climate change must be pursued together. The fertiliser industry welcomes this position of the Commission which considers fertilisers as a sector providing solutions to the food security and climate change dilemmas.

^x Based on a benchmark of the average best 10% of producers in the EU; as a result 95% of the industry must pay.

Antoine Hoxha¹, Tore K Jenssen², Christian Pallière¹ and Mark Cryans¹

¹ Fertilizers Europe, Brussels, Belgium.

² Yara International, Oslo, Norway.

19 pages, 13 figures, 1 table, 9 bibliographic references.