This is an HTML version of an attachment to the Freedom of Information request 'Meeting between TAXUD and CEFIC'.




Ref. Ares(2021)4361847 - 05/07/2021
 
TAXUD DIRECTOR GENERAL  
Gerassimos THOMAS 
 
 
MEETING WITH MR JAKOB B. HANSEN 
(FERTILIZERS EUROPE) AND MR MARCO 
MENSINK (CEFIC) 
16 April 2021, 10h00 
 
 
 
 
 
 
TABLE OF CONTENT 
1. Scene setter 
2. Cefic and Fertilizers Europe positions on Carbon Border 
Adjustment Mechanism 
3. Defensives 
4. Annex (CV) 
 
 

DG/325 - Meeting With Mr Jakob B. Hansen (Fertilizers Europe) and Mr Marco 
Mensink (Cefic), 16 April 2021 
1. SCENE  SETTER 
You will meet Mr Jakob B. Hansen (Fertilizers Europe) and Mr Marco Mensink 
(Cefic). The meeting was organised upon their request. The intention is to discuss 
Carbon Border Adjustment Mechanism (CBAM). 
In their previous exchange with the Commissioner during the roundtable with CBAM 
stakeholders, held last March, both Cefic and Fertilizers Europe emphasised the 
importance of maintaining free allowances in order to ensure competitiveness of the 
European industry and its value chains. They consider CBAM to be complementary 
to the EU ETS, which should be designed in a way to ensure carbon leakage 
protection, for both imports and exports, adequate to EU’s climate ambitions. 
On several occasions, Fertilizers Europe argued that, due to its high trade and 
energy intensity as well as the fact that fertilizers are relatively simple products, the 
sector would be well suited for CBAM. 
In turn, Cefic advocates for a comprehensive industrial policy strategy that would 
allow industry to competitively transform to a low-carbon economy.  
Possible issues to be raised during the exchange relate to the design of CBAM, 
selection of sectors to be covered, potential risks (e.g. disrupting impact on value 
chains, relocation of downstream industries, and increase in prices of 
products/materials covered by CBAM); and planned support to industry in its 
transition to carbon-neutrality. 
 
 
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DG/325 - Meeting With Mr Jakob B. Hansen (Fertilizers Europe) and Mr Marco 
Mensink (Cefic), 16 April 2021 
2. CEFIC AND FERTILIZERS EUROPE POSITIONS 
ON CBAM 
Previous exchanges with Cefic 
During the recent roundtable between the Commissioner and CBAM stakeholders, of 
8 March, Marco Mensink Director General of Cefic, emphasised that the EU 
chemicals industry imports primarily base materials from non-EU markets and 
exports specialised chemical products outside the EU (China, the US, UK and in the 
longer term Africa).  
 
He stressed the importance of free allocation to the chemicals industry, especially in 
the context of its export orientation. Protection for both imports and exports, he 
argued was important to ensure competitiveness. Based on this, Cefic favoured a 
phase in-phase out approach in the introduction of CBAM against existing anti 
carbon leakage measures. 
 
Cefic’s position 

The EU ETS currently protects industrial installations against carbon leakage through 
free allocation of allowances. Cefic agrees on the need to protect against carbon 
leakage and safeguard the competitiveness of domestic industries. As regards 
CBAM, as a possible alternative instrument to free allocation to avoid carbon 
leakage, Cefic’s position is that a simple CBAM addressing only imports, without free 
allowances or comparable measures to address the additional cost for exports, will 
not be sufficient to secure competitiveness along the value chains and avoid 
consequent economic and social loss. A CBAM would have to take account of all 
embodied emissions along the value chain both direct and indirect. Otherwise, it may 
lead to imports of cheaper downstream products, contrary to the policy, objective, 
and damage upstream capacity. For these reasons, CEFIC is considering two 
additional design options for carbon leakage protection, to address export and value 
chain carbon leakage risks: 1) a climate contribution that would be paid by 
consumers for emissions up to benchmark-level; and 2) the combination of an 
imports contribution (with a continuing ETS price) and free allowances for EU 
producers. 
In this context, Cefic has argued that the impact assessment on the CBAM should 
look at all carbon pricing policies and carbon leakage prevention options including 
direct and indirect carbon costs and consider several scenarios. For the new 
measure to deliver the required benefits for the chemicals industry, Cefic has 
highlighted the importance of ensuring export competitiveness, World Trade 
Organisation compatibility and alignment with the Paris Agreement. The critical role 
of international dialogue has also been emphasized in order to avoid trade conflicts, 
while revenues resulting from new measures are proposed to be used to support low 
carbon manufacturing and investment. Cefic has further stressed that the current 
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DG/325 - Meeting With Mr Jakob B. Hansen (Fertilizers Europe) and Mr Marco 
Mensink (Cefic), 16 April 2021 
carbon leakage measures, based on the free allowances, must not be compromised. 
Any chosen option should minimise cost and complexity, while the framework must 
be robust as regards monitoring, reporting and verification. 
 
 
 
 

 
Previous exchanges with Fertilizers Europe 
Fertilizers Europe has been in contact with the Commission, on several occasions, 
both at political and at service level to express their support for a CBAM. They 
consider fertilizers as a good candidate for the measure stressing that it should 
complement the ETS and that free allowances are maintained in order to ensure 
competitiveness for the EU industry and value chain. 
During the recent roundtable between the Commissioner and CBAM stakeholders, of 
8 March, Jacob Hansen, Director General of Fertilizers Europe stressed that the 
fertilizer industry will have a very important role to play in the transition to a green 
hydrogen economy, as producers and consumer of hydrogen, but even more 
importantly as producers of green ammonia which will play an important role in the 
hydrogen economy as carrier of hydrogen and as basis for green fertilizers and green 
maritime fuel.  
Fertilizers Europe position 
In an open letter sent to President von der Leyen as well as Executive Vice-President 
Timmermans and Commissioner Gentiloni, Fertilizers Europe defend that CBAM is 
not an alternative but a natural and logical addition to the system of existing carbon 
leakage measures. In their view, the EU ETS as it currently stands is not enough to 
cover all parts of carbon leakage, particularly those that result from imports of 
products into Europe without a carbon cost attached to them. Therefore, CBAM 
needs be designed as a complementary measure, to be introduced while factoring in 
the actual carbon costs faced by EU producers.  In combination with continued free 
allowances, CBAM can ensure competitiveness of European industries on the export 
markets as well as the competitiveness of the entire value chain within the Single 
Market.  
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DG/325 - Meeting With Mr Jakob B. Hansen (Fertilizers Europe) and Mr Marco 
Mensink (Cefic), 16 April 2021 
Furthermore, in a statement issued in reaction to the European Parliament’s vote on 
CBAM1, Jacob Hansen, Director General of Fertilizers Europe, argued that due to its 
high trade and energy intensity, the sector is well suited for CBAM. Several fertilizer 
producers have already announced projects to upscale low carbon technologies, but 
without adequate support this transition would we unattainable. In this regard, he 
supported the Parliament’s call for the continuation of free allowances under CBAM 
design to ensure competitiveness of European industries.  
 
 
                                            
1
 
Available at https://www.fertilizerseurope.com/wp-content/uploads/2021/03/Fertilizers-Europe-
PR_EP-resolution-on-CBAM.pdf  
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DG/325 - Meeting With Mr Jakob B. Hansen (Fertilizers Europe) and Mr Marco 
Mensink (Cefic), 16 April 2021 
3. Defensives   
The ETS system is sufficient to address climate change. The CBAM 
will hurt EU competitiveness at a time when we should focus our 
efforts to recover from the pandemic?  

•  In order to successfully increase the EU climate ambition by reducing carbon 
emissions, there is a need to address the risk of carbon leakage. The Carbon 
Border Adjustment Mechanism is a key element of the Commission’s 
comprehensive green growth agenda and will be proposed in June 2021 as 
part of the ‘Fit for 55’ Package’. This package put our commitment to increase 
the 2030 targets for emissions reductions to at least 55% into concrete action. 
It will cover in particular the review of sectorial legislation in the fields of 
climate, energy, transport, and taxation. 
•  This said, the Green Deal is more than a climate strategy - it is the new growth 
strategy for the EU. The Green Deal is at the core of our economic stimulus 
package. The investments and reforms required to prop up and strengthen our 
economies must help accelerate the transition toward climate-neutral and 
resilient societies. This is how we will boost growth, competitiveness and 
employment and support our labour market.  
•  The Carbon Border Adjustment Mechanism is a climate policy instrument. It 
will incentivise third country producers in sectors affected by carbon leakage to 
adopt low carbon production processes. 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
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DG/325 - Meeting With Mr Jakob B. Hansen (Fertilizers Europe) and Mr Marco 
Mensink (Cefic), 16 April 2021 
 
 
 
 
 
 
 
 
 
en. 
 
 
 
 
 
 
 
What CBAM options are being considered? What is the state-of-
play? 

•  The ongoing full Impact Assessment, which started in September and should 
be completed by spring 2021, is looking into six broad options. A notional 
ETS, an import tax or an excise duty are among these options and we will 
probably start the CBAM with a number of selected sectors, where the risk of 
carbon leakage is particularly high.  
•  The Carbon Border Adjustment Mechanism is a climate measure and, as 
such, the different options under consideration in the context of the Impact 
Assessment will be evaluated on the basis of climate effectiveness, WTO 
legality as well as other criteria. Finally, on transition, the question of how to 
introduce or phase-in CBAM will need to be carefully assessed.  
•  As part of the Public Consultation that was concluded in October 2020, we 
received over 600 responses. The feedback from the consultation is feeding 
into the analysis.  
 
 

 
 
 
 
 
 
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DG/325 - Meeting With Mr Jakob B. Hansen (Fertilizers Europe) and Mr Marco 
Mensink (Cefic), 16 April 2021 
How will you select sectors to which the Carbon Border Adjustment 
Mechanism may apply?  

•  It is one of the core principles of the CBAM that it should be designed in a way 
that would allow for eventually covering all sectors and products. 
•  The Commission commissioned a study on (among other things) the selection 
of products (primary and/or downstream products) which could be subject to a 
Carbon Border Adjustment Mechanism. Practical implementation and 
possibility to measure embedded carbon emissions will be key drivers. 
•  Furthermore, in our impact assessment, we are focusing on sectors where 
there is a greater risk of carbon leakage. 
•  We will also pay attention to the feasibility of the measure as well as its 
economic (which includes administrative and compliance costs), social and 
environmental impacts, and introduce it only where it makes sense. 
•  Iron and steel, aluminium, cement, fertilizers and electricity are part of the 
sectors we are looking into.  
 
Will you include Hydrogen in the scope of CBAM?  
•  Hydrogen is indeed going to play an important role in electrification. If imports 
of high emissions hydrogen develop, there could indeed be a risk of carbon 
leakage. 
•  CBAM will be designed as sector neutral. If we detect a risk of Carbon 
Leakage with respect to a specific product, we will be ready to include it at the 
given point in time.  
 
 
 
 

 
 
 
  
 
 
  
 
.  
 
 
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DG/325 - Meeting With Mr Jakob B. Hansen (Fertilizers Europe) and Mr Marco 
Mensink (Cefic), 16 April 2021 
 
What measures, if any, are being considered to support industries 
in their transition to carbon-neutrality? 

•  The Carbon Border Adjustment Mechanism is a key element of the 
Commission’s comprehensive green growth agenda. As part of the ‘Fit for 55 
Package’ under the Green Deal, it will be one of the means to help with the 
transition towards a greener and more sustainable economy. 
•  Indeed, the Green Deal is more than a climate strategy - it is the new growth 
strategy for the EU. The Green Deal is at the core of our economic stimulus 
package. The investments and reforms required to prop up and strengthen our 
economies must help accelerate the transition toward climate-neutral and 
resilient societies. This is how we will boost growth, competitiveness and 
employment and support our labour market.  
•  I also would like to recall that the EU finances a number of policies that 
support investments needed for the transition to a climate-neutral, green, 
competitive and inclusive economy. Some 37% of the spending of the RRF, 
for instance, will support the green transition.  
•  The Investment Plan and the Just Transition Mechanism will also contribute to 
address the transition needs for investment, including in the most affected 
areas/sector. 
 
How can a CBAM, used as a source to repay borrowing from Next 
generation EU borrowing, be WTO compatible? 

•  The EU has to respect its international obligations, among which respect of 
WTO rules. 
 
 
 
. Therefore, it is essential that 
this Mechanism is designed as an environmental measure to reduce (global) 
emissions. On the other hand, the measure will have to be as simple as 
possible. 
•  As a rule, a Carbon Border Adjustment Mechanism will have to be non-
discriminatory towards products imported from third countries (or even among 
third countries). In principle, they should not be treated less favourably than 
like products of EU origin. There are however different provisions in the GATT 
rules which could apply among which general exceptions to the basic rules. A 
careful analysis is being made.  
 
 
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DG/325 - Meeting With Mr Jakob B. Hansen (Fertilizers Europe) and Mr Marco 
Mensink (Cefic), 16 April 2021 
 
Risks of relocation of downstream industries 
•  It is too early to talk about the potential impact on particular sectors and 
respective downstream industries. This will largely depend on both the final 
design of the measure and the specific products to which it would apply. 
These aspects are part of the Commission’s ongoing impact assessment.   
•  It is important to assess the implications of a wide range of options in order to 
be able to identify a design that is workable in practice, achieves the objective 
and meets the most crucial principles, such as non-discrimination and World 
Trade Organisation compatibility. The forthcoming impact assessment and the 
studies preceding will inform the Commission and enable it to propose the 
best possible design. 
•  Notwithstanding the above, any proposed option should remain simple in 
design and also seek to minimise costs for trade, the complexity to importers 
and trade partners and impact on downstream sectors. At the same time, the 
design must ensure clear monitoring, reporting and verification.  
 
Contact(s) – briefing contribution:  
 
 
 
 
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DG/325 - Meeting With Mr Jakob B. Hansen (Fertilizers Europe) and Mr Marco 
Mensink (Cefic), 16 April 2021 
4. ANNEX 
 
 
  
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
  
 
 
  
 
 
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