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European Petrochemicals Industry - Carbon Credit Auctioning to Decrease the Profitability
GlobalData, July 2011, Pages: 5
European Petrochemicals Industry - Carbon Credit Auctioning to Decrease the Profitability
Summary
The proposed draft amendment of the phase-3 European Union (EU) Emission Trading Scheme (ETS) has called for radical changes in the method of carbon credits distribution in the region. The draft amendment which was submitted by the European Commission in March 2011 has suggested the inclusion of the petrochemicals industry in the ETS preview from 2013 onwards. EU ETS was implemented in the year 2005 with an objective of decreasing carbon dioxide (CO2) emissions by 20% until 2020. Under the scheme, a cap on CO2 emissions was imposed on more than 11,500 industrial units across the EU. In the first phase, companies were provided with carbon allowances (Carbon Credits) freely as a right to emit CO2. At the end of each year, companies must surrender the amount of allowances equivalent to their CO2 emissions limit. Companies emitting lesser CO2 can trade their emission rights with those who have crossed their CO2 emission limit.
The draft amendment also suggested auctioning of allowances through centralized European agency instead of providing it freely by member governments. There are many concerns among petrochemicals producers in Europe who are already struggling from declining profit margins and severe competition. The petrochemicals industry supports the EU initiative to curb carbon emissions but it is not in favor of the auctioning system. Producers have apprehensions that the auctioning of carbon credits will decrease the profitability and will force producers to relocate the manufacturing facilities to other regions with less or no carbon emission restrictions.
Scope
- Analyses the likely impact of inclusion of petrochemcials sector in the EU-ETS
Reasons to buy
- Understand the Energy Trading Scheme (ETS) in Europe
- Formulate strategies based on the current trends in the industry
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