Competitiveness must not suffer

Emissions trading: allocation free of charge on the basis of technological standards is the better concept

“The planned auctioning of emissions certificates poses a threat to the competitiveness of energy-intensive industries, because we are not able to pass on the higher costs to our customers,” said Dr. Harald Schwager, BASF SE Executive Director. “The result will be that energy-intensive production and the associated jobs will move to non-European countries where climate protection and – more so – the cost of CO2 certificates or CO2 taxes is not an issue. This is not the way to serve the interests of climate protection.”



According to the plans to date, companies will be expected not only to continue lowering their emissions, but also to bid at auction for the rights to emit greenhouse gases, with the industry-auctioned proportion to rise to 100 percent by 2020.



For the chemical industry this would mean a massive increase in costs. Assuming a certificate price of €35 per tonne of CO2, annual costs would be more than €2 billion in Germany after 2020 and almost €9 billion in the EU. Bidding for certificates would cost BASF alone as much as €450 to €600 million (depending on the CO2 price - 30/40 EUR/t).



BASF and the entire industry are calling for an exemption on auctioning for exposed sectors, i.e. areas with a relocation risk. Deliberations at the EU Summit on December 11 and 12 need to focus on presenting a conclusive definition of exposed sectors. A decision with such vast economic implications must not be delayed. “Our standpoint is that the chemical industry is an exposed sector,” said Schwager. To avoid compromising the economic and ecological benefits of Verbund production at many European chemical production sites, basic chemical production and the main value chains based on it need to be included.



To ensure that climate protection targets are met nonetheless, the proposal is that certificates be issued free of charge on the basis of technological standards (Best Available Technology); only those with leading-edge technology would be entitled to claim free certificates. “This ensures that energy-intensive industries do their bit for climate protection within the emissions trading system,” Schwager concludes.



BASF and climate protection

BASF supports Kyoto Protocol targets and ambitious new targets in a global post-Kyoto agreement for 2020. The company considers climate protection to be a global task and addresses that challenge at sites throughout the world. Numerous measures have already reduced greenhouse gas emissions by 38% in the period from 1990 to 2002; based on specific reduction per tonne of product sold, the reduction is as high as 61%. BASF has set itself highly ambitious new targets for 2020. Using 2002 as a reference, the organization intends to lower its specific greenhouse gas emissions by 25% by 2020.



BASF is the first company in the industry to present an extensive carbon balance. The result: BASF products save three times as much greenhouse gas emissions as emitted during the manufacture and disposal of all BASF products. Thus BASF products contribute to climate protection significantly. To improve this ratio even more, the company develops innovative technologies and materials for sustainable climate protection. BASF spends more than €400 million annually – or about one-third of its research budget – on energy efficiency, climate protection, conserving resources, and renewable resources.