Assessment of Trade and Emissions intensity

Ecofys conducted an assessment for Euromines which came to the following conclusion:

For the various sub-sectors of Euromines trade intensity could be identified which gaeve the following picture: Iron ore (84%), non-ferrous metal ores (83%) , Mined Potash (70%), Magnesia (178%). This is not surprising since many commodities are being imported into Europe.

When it came to the assessment of the emission intensity the picture looked like this:

Figure 3  NACE level CL indicator from EC data. Bubble size indicates the size of the sectors emissions.

Process emissions are particularly significant for magnesia since CO2 is the result of the chemical conversion. They account for over 50% of direct emissions. This result indicates that it will be difficult for sectors like these to improve their emissions intensity to match the rate of decline of free allowances anticipated in phase 4 of the EU ETS, leading to exposure to a greater risk of CL.

Recommendations

•             To ensure carbon leakage status for the carbon and graphite sector, the European Commission needs to continue its current stance of permitting PRODCOM level assessments. It is recommended that the carbon and graphite sector highlights the high emissions intensity and trade intensity ratio of feedstock production, and embarks on a data collection exercise to produce evidence for this over the relevant time period.

•             For sectors with high share of process emissions (e.g. magnesia and carbon and graphite feedstock) recalculation of benchmark levels would be more appropriate than the proposed generic cuts to benchmarks. A separate fund of free allowances for process emissions is also a potential solution for this issue. For other sectors, eventually the reassessment of benchmarks would be more appropriate.

•             R&D support for technologies which can deliver emission intensity or electricity intensity improvements, following a more structured review of opportunities.