Ref. Ares(2022)1133188 - 16/02/2022
From:
CAB BRETON ARCHIVES
To:
Subject:
FW: CEMBUREAU"s initial reaction on ‘Fit for 55’ package + request for a meeting Ares(2021)5521971
Date:
mercredi 8 septembre 2021 16:01:00
Attachments:
image001.png
Document 20327 - 20327 CEMBUREAU position paper on the draft reviewed State Aid Guidelines on Energy
and the Environment.pdf
We confirm receipt of your message
From:
(CAB-BRETON)
Sent: Wednesday, September 8, 2021 3:33 PM
To: CAB BRETON ARCHIVES <xxxxxxxxxxxxxxxxxxx@xx.xxxxxx.xx>
Subject: FW: CEMBUREAU's initial reaction on ‘Fit for 55’ package + request for a
meeting Ares(2021)5521971
From:
Sent: Wednesday, September 8, 2021 3:07 PM
To: CANTON Joan (CAB-BRETON)
;
(CAB-BRETON)
Cc:
<
>;
(CAB-
BRETON)
Subject: CEMBUREAU's initial reaction on ‘Fit for 55’ package + request for a
meeting
Dear
, dear Mr Canton,
Firstly, I hope all is well and that you had a good break.
We wanted to share with you below CEMBUREAU’s initial reaction on the ‘Fit for
55’ package. We will complement the thoughts below in the weeks to come with
more detailed documentation, but I hope the below remarks are useful at this
stage.
In addition, we wanted to follow-up from our previous exchanges and ask
whether you would be available for a brief (virtual) meeting in the coming
weeks? This would be the occasion to discuss the overall Fit for 55 package as
well as a number of issues related to industrial decarbonisation. As things stand,
our
and I would be available on the following dates:
· 20th September in the morning or at 16.00
· 21st September at 10.00
· 22nd September anytime before 16.00
· 23rd September afternoon
· 28th September morning
· 29th September morning
· 4th October
· 5th October morning
· 8th October
· 14th October
· 18th October
· 19th October
· 21st October
· 25th October
· 26th October
Would any of these be convenient from your perspective?
Many thanks in advance for your consideration and we hope to see you soon.
Best Regards,
CEMBUREAU / initial reaction on ‘Fit for 55’ package
Carbon Border Adjustment Mechanism – draft Regulation
· We welcome the draft Regulation and the Commission’s
ambition to ensure that “
imported products are subject to a
regulatory system that applies carbon costs equivalent to the
ones that otherwise would have been borne under the EU ETS”.
Whilst the proposed CBAM is broadly fair and transparent, we
believe it should be further strengthened to strictly reflect the
carbon costs faced by EU suppliers (e.g. stronger incentives to
use verified emissions as opposed to averages), and through the
introduction of stronger monitoring and circumvention
mechanisms (e.g. consideration for a ‘centralised’ CBAM
authority, measures against resource shuffling). We also note
that a number of delegated acts will be crucial for the successful
roll-out of CBAM.
· We strongly believe that CBAM should include indirect
emissions; these are critical when considering the
decarbonisation of European industries, which necessitates a
greater electricity use. Similarly, due consideration should be
given to transport emissions, now that road and maritime
transport will also be covered through carbon pricing schemes;
· Crucially, CBAM should include export rebates/a mechanism
for exports to avoid a situation its implementation would result
in lower access to export markets for the European industry,
with a negative impact on global CO2 performance; this point is
particularly critical given the proposed phase-out of free
allocation;
· In relation to free allocation under the EU ETS, it will be
important to ensure a gradual and ‘de-risked’ implementation of
CBAM (see below)
· Finally, we believe that CBAM should avoid market distortions
between sectors and ensure that its revenues support the
decarbonisation of energy-intensive industries.
EU Emission Trading Scheme – draft Directive
· The key parameters of the ETS reform (increase of the Linear
Reduction Factor, the re-basing of the cap and strengthened
benchmark rules) will put considerable pressure on the industry,
and further accentuate carbon leakage in the sector;
· In this context, it is essential that ensure a gradual and ‘de-
risked’ implementation of CBAM, where the instrument co-
exists with ETS free allocation at current level until it is fully
operational and tested;
· ETS revenues should be used to unlock investments in
breakthrough technologies such as Carbon Capture, Use and
Storage (CCUS), which plays a pivotal role in the cement
industry. The introduction of Carbon Contracts for Difference
(CCDs) is welcomed and we stand ready to work on its further
implementation. We were pleased to see the extensive attention
for the design of Contracts for Difference in the Commission’s
Impact Assessment with due attention to covering both CAPEX
and OPEX.
· We are however concerned about the impact of the proposed
ETS Directive on CO2 utilisation. it is imperative that clear
accounting rules are put in place to incentivise the re-use of
CO2. As things stand, the draft Directive would significantly
constrain the potential of CCUS technologies.
· The use of non-recyclable waste and biomass waste is a key
lever to reduce emissions in cement production. Going forward,
it is key to include waste incinerators in the EU ETS so that they
are faced with similar climate requirements to those of cement
kilns.
Energy Taxation – draft Directive
· We are still looking at the text to understand how the provisions
of the Directive would impact us on namely two issues: the
covering of the alternative fuels/waste that the cement industry
uses to phase-out fossil fuels, and the modified non-applicability
provisions in article 3 (mineralogical processes and dual use).
Draft State Aid Guidelines on Energy and the Environment
· Lastly, CEMBUREAU wishes to underline the importance of an
initiative of the European Commission that is not part of the Fit
for 55 package, but has the potential to significantly and
adversely impact the sector’s decarbonization efforts. As stated
above, decarbonisation will entail an increased need for
electricity in our sector (carbon capture, for instance, requires
50% to 120% more electricity). The cement sector, contrary to
the steel sector, is currently not eligible for indirect
compensation under the ETS Directive mainly because of a 20%
trade intensity threshold. This same threshold is now applied by
the European Commission in its Draft Energy and Environment
State Aid Guidelines resulting in a deletion of the cement sector
from the eligibility list for electricity levy exemptions. This
proposed change puts at risk 36 million tonnes of cement
production in the EU which equals the production capacity of
29%-34% of total plants in the EU. CEMBUREAU has
submitted comments into the public consultation (please find it
attached) but maintaining eligibility is a crucial issue for the
facilitation of the decarbonization of our industry.
From:
Sent: mardi 6 juillet 2021 09:16
To:
;
Cc:
Subject: CEMBUREAU / CBAM statement, latest EU import trends, and CO2 costs
in cement industry
Dear
, dear Mr Canton,
I hope all is well. As a follow-up to our previous exchanges, and since we
understand that discussions on the ‘Fit for 55’ package and more specifically on
the co-existence between ETS free allocation and CBAM will take place in the
coming days, we wanted to provide you with a few recent documents:
· The statement that CEMBUREAU issued on the Fit for 55 package, which
sets out position on a co-existence between ETS free allocation and
CBAM, and the necessity for CBAM to ensure a fully comparable CO2
cost basis between EU and non-EU suppliers.
· An infographics on recent trends in EU cement imports from non-EU
countries, based on Eurostat data, showing a significant increase in
recent years (160% increase between 2016 and 2020, and 25% increase
in 2020 alone);
· Some calculations that we made recently about the importance of CO2
costs in the cement industry, based on publicly available data. These
shows that in light of the recent ETS price increase, and despite free
allocation, the EU cement industry’s CO2 costs amount today to about 8-
10% of our total production costs. Such high share of CO2 costs is quite
unique to our industrial sector and is very challenging in a low-margin
business like ours - no other cement company in the world is exposed to
such costs. It is therefore vitally important to proceed carefully with
CBAM and avoid any phase-out of free allocation until CBAM is fully
operational and tested and demonstrates an appropriate level of carbon
leakage protection.
We hope this is helpful. Please do not hesitate to contact us should you need any
additional information, and we will of course be delighted to meet again when
the package is published.
Finally, we thank you for all the work which has been done in the past months in
view of the package and we wish you a relaxing summer break.
Best Regards,
CEMBUREAU – The European Cement Association
Rue d'Arlon 55, 1040 Brussels, Belgium
W:
www.cembureau.eu
EU Transparency Register No: 93987316076-63
From:
Sent: Monday, June 21, 2021 9:25 AM
To: CANTON Joan (CAB-BRETON)
>;
Cc:
;
Subject: RE: CEMBUREAU, European Cement Association / Legal opinion
on CBAM and meeting request on “Fit for 55%” package
Importance: High
Dear
, dear Mr Canton,
Please allow me to follow-up from my previous messages – as
mentioned below, we would strongly appreciate to have a brief virtual
meeting with you in the coming days. In a nutshell, our industry is pretty
alarmed by messages coming out of the European Commission that, as
part of the ‘Fit for 55’ package, the level of free allowances for industry
may be significantly reduced for sectors covered by a Carbon Border
Adjustment Mechanisms (CBAM). I have put just below my signature
some of our key messages on the matter.
The following dates would work well for Koen and me for a brief virtual
meeting:
· 24th June at 16.00
· 25th June at 09.00
· 28th June anytime in the afternoon
· 29th June anytime from 15.00
· 30th June anytime except lunchtime
· 1st July anytime in the afternoon
· 2nd July at 09.00
Would any of these dates/time be suitable from your perspective?
We thank you for your consideration and look forward to hearing from
you.
Best Regards,
It is vital that the ‘Fit for 55’ package does not endanger the investment
decisions and projects made by European cement companies. In this
respect, the package should:
·
Ensure that free allocation under the EU ETS fully co-
exists alongside CBAM for an appropriate transition
period lasting until 2030. Legal analysis has shown that
such design can be WTO compatible whilst avoiding any
form of ‘double protection’, provided that CBAM takes into
account the level of free allowances in calculating the levy
to be paid by third country importers. Such co-existence is
key to shield the industry from the risks of a complex and
untested mechanism by CBAM. It also honours the
legitimate expectations flowing from the existing EU ETS,
adopted in 2018 and applicable until 2030, which forms the
basis for decarbonisation investments in industries with
long-term investment cycles;
·
Ensure a fully comparable CO2 cost basis between EU
and non-EU cement suppliers, and does not result in
weakened carbon leakage protection. Already under the
current ETS, only the average 10% best performers receive
their full allocation for free, which incentivises best
performing companies on CO2 reductions. This means 95%
of the EU cement operators do carry a CO2 cost that
virtually no other cement plant in the world is facing. Any
additional cost that would not be met with an appropriate
level of CBAM would paralyze the investments already
initiated in the European industry;
·
Include a solution for European exports through export
rebates, and covers both direct and indirect emissions.
Such approach would incentivize emission reductions in
both the EU and third countries and prevent carbon-
intensive products to flood the EU market to the detriment
of EU operators that bear the full CO2 cost;
·
Secures a solid monitoring and verification system for
assessing emission levels in third countries whereby a
proper monitoring is set up to accurately measure imports’
emissions, and mitigate any risk of circumvention of CBAM
through resource shuffling or public support measures.
·
Include a sufficiently broad number of sectors in CBAM
to avoid market distortions both in terms of ETS coverage
and on downstream markets.
In the absence of these essential elements being part of the “Fit for 55”
package, the conditions for the cement industry to develop a sound
business case for investments in Europe and its crucial role in supplying
the downstream concrete and construction market, would be seriously
compromised. This would indeed happen at a time the sector faces
rapidly-increasing imports from non-EU countries (see some data
attached) and witnesses the emergence of an alternative business model
whereby clinker, the most CO2-intensive part of cement, is produced
outside the European Union and imported to be grinded in Europe. An
exacerbation of these trends would only lead to significantly higher CO2
emissions in Europe, in addition to closure of production sites. We firmly
believe in a scenario where a comparable cost basis with third country
operators is ensured, allowing all to work towards a more global
Industrial Decarbonisation Agenda as suggested in the Conclusions of the
recent G7 summit.
From:
Sent: lundi 14 juin 2021 09:05
To:
Cc:
Subject: RE: CEMBUREAU, European Cement Association / Legal opinion
on CBAM and meeting request on “Fit for 55%” package
Dear
, dear Mr Canton,
I am writing to follow-up from the below e-mail and meeting request.
Given the very dense EU agenda for our industry and the upcoming “Fit
for 55” package, we would appreciate to have a brief virtual meeting
with you in the coming weeks.
The following dates would work for my
and me:
· 21st June morning
· 22nd June afternoon
· 23rd June at 14.00 or 15.00
· 24th June at 16.00
· 28th June anytime from 11.00
· 29th June at 16.00
· 30th anytime except lunchtime
· 1st July anytime
· 2nd July afternoon
· 5th July anytime
· 6th July anytime
I thank you in advance for your response and we look forward to hearing
from you.
Best Regards,
CEMBUREAU – The European Cement Association
Rue d'Arlon 55, 1040 Brussels, Belgium
W:
www.cembureau.eu
EU Transparency Register No: 93987316076-63
From:
Sent: mercredi 19 mai 2021 08:41
To:
;
Cc:
Subject: CEMBUREAU, European Cement Association / Legal opinion on
CBAM and meeting request on “Fit for 55%” package
Dear
, dear Mr Canton,
I hope all is well. I am writing to follow-up from our previous exchanges
on Carbon Border Adjustment Mechanisms (CBAM) and send you a legal
opinion which have recently commissioned on the topic. I also wanted to
ask whether you would be available for a brief virtual meeting in the
coming weeks.
Firstly, I am pleased to send you the attached legal opinion, which looks
at the WTO compatibility of a CBAM in combination of with free
allowances under the EU Emission Trading Scheme (ETS) and export
rebates. The opinion has been developed by
(
) at
the request from CEMBUREAU and other associations. A key conclusion
from the opinion is that WTO law does not
per se prohibit such co-
existence of measures, provided that an appropriate methodology is
used to calculate the exact scope of CBAM measures so as not to overlap
with the coverage of ETS allowances.
As
will remember, this is an issue we have extensively discussed
with the European Commission. We hope this legal opinion will be
helpful and we would of course be pleased to discuss it. We will be
sending a copy of the opinion to your colleagues in the relevant DGs.
In addition, we wanted to ask whether you would be available for a brief
virtual meeting in the coming weeks. This would be the occasion to
update you on our sector’s decarbonisation efforts, the recently-
published industrial strategy and the upcoming “Fit for 55%” package, in
relation to industrial decarbonisation. This would also be the occasion to
introduce our sector to Mr Canton.
As things stand, we would be available on the following dates:
· 31st May anytime
· 1st June afternoon
· 2nd June afternoon
· 3rd June anytime
· 4th June anytime
· 7th June afternoon
· 8th June morning
· 9th June afternoon
· 10th June morning
· 14th June afternoon
· 15th June morning
· 16th June anytime
· 18th June anytime
Would any of these dates be convenient from your perspective?
I thank you in advance for your response and I look forward to hearing
from you.
Best Regards,
CEMBUREAU – The European Cement Association
Rue d'Arlon 55, 1040 Brussels, Belgium
W:
www.cembureau.eu
EU Transparency Register No: 93987316076-63
