Cement – The Final Carbon Fatcat
ETS
How Europe’s cement sector benefits and the climate suffers from emissions trading flaws
Sandbag’s new report reveals the European cement sector is reaping huge financial benefits from climate laws, adding to company profits and encouraging the import of emissions from other countries.
Perverse incentives in the design of the EU’s ‘flagship’ climate change policy, the Emissions Trading Scheme (ETS), have increased cement sector emissions. We estimate these rules have resulted in an extra 15 million tonnes of CO2. If the cement sector had been outside the ETS, its emissions would be lower. While the surplus in emissions allowances that have accrued to most industrial sectors are now declining, in the cement sector the surpluses continue to grow.
Five “Carbon Fat Cat Companies” from the cement sector have collectively received nearly €1 billion worth of spare EU allowances (EUAs) for free between 2008 -2014. As the number of free allowances available to all industry is fixed, over-allocation to cement companies is reducing the volume that can be allocated to other sectors that may need more protection.
These facts highlight the urgent need to overhaul the rules governing the ETS in the ongoing reform of the Directive. A low emissions cement sector is possible, but to incentivise it requires the ETS:
· Has a substantially higher carbon price (currently just €5/tonne.
· Ends the over-allocation of allowances.
· Provides new support for innovative processes and Carbon Capture Utilisation & Storage.