European Chemical Industry Council (CEFIC)

Nominated for successfully lobbying for free allowances under the EU Emissions Trading Scheme and for pushing to weaken EU and international climate policies.

The main players in the European chemical industry are all members of the European Chemical Industry Council (Cefic), which lobbies on their behalf at the EU level. Members include chemical giants Arkema, BASF, Bayer, Dow, DuPont, ExxonMobil Chemical, Shell Chemicals and Solvay.

The chemical industry is a major source of greenhouse gas (GHG) emissions, burning 12% of all energy in the EU. As a result, it has been involved in a vigorous campaign to escape EU measures to reduce carbon dioxide (CO2) emissions. Under the EU Emissions Trading Scheme (ETS) – one of the EU’s key mechanisms for reducing emissions – industry is effectively required to buy the right to pollute through a system of emissions permits. The chemicals industry has so far been excluded from the first two phases of the scheme, but will be covered by Phase Three, which runs from 2013-2020.

During a recent review of the ETS, Cefic lobbied the EU, warning that the ETS would increase industry costs and force its members to relocate to countries with no CO2 restrictions. This, it argued, would result in job losses in Europe and continued damage to the global environment. ‘Carbon leakage’, as this is known – when there is an increase in emissions in one country as a result of an emissions reduction by a second country ­– has become one of the most contentious factors of the ETS review.

Cefic is also actively lobbying the EU to reduce – or at least not increase – their emission reduction commitments at the climate talks in Copenhagen. The chemical industry wants a new international agreement to include equivalent targets for both industrialised countries and emerging economies – despite existing international agreements that say that developed countries must bear the brunt of the cost of tackling climate change.

However, at the same time as lobbying for weaker targets, Cefic has launched a PR campaign to highlight how the chemicals industry is, in fact, helping reduce emissions levels in Europe. Its materials highlight the sustainable nature of products launched in the run up to the Copenhagen climate talks. For example, a set of postcards illustrate “Chemistry. Innovative climate change solutions”. These claim, among other things, that the use of chemicals makes cars more sustainable, show the role of chemicals in different renewable energies and the part played by agrochemicals in emissions reductions.

The same message has also been promoted by the International Council of Chemical Associations (ICCA), which launched a report in July 2009 claiming that the benefits of the chemical industry’s products, in terms of emission savings, were two to three times greater than their carbon footprint.

Lobbying evidence

According to documents obtained via access to information requests, Cefic has been very actively pushing for discussions on the ETS review with the European Commission. It has done this through face-to-face meetings and letters to both the Environment and Enterprise departments. In a letter dated 14 December 2007, for example, Cefic’s Director General, Alain Perroy, wrote to Commissioner Dimas warning: “We are ready to mobilise all forces to have a fruitful consultation on this occasion.”

According to Avril Doyle, an Irish MEP who has worked on the ETS in the European Parliament, the German chemical industry, along with German coal, has been the most effective lobbyist on Phase Three of the ETS.

CEFIC’s Lobbying Impact

Cefic’s lobbying has had an impact. When the first proposals for the latest phase of ETS were announced, they included plans to auction an increasing number of emissions trading permits. Previously, industry has been allocated an allowance of free permits to pollute. Under this new phase, industry would now have to pay for them instead.

This led to an intensive lobbying operation from 2007 on, which emphasised the threat of the EU’s chemicals industry being forced to relocate – the so-called ‘carbon leakage’ argument. After pressure from several Member states – in particular Germany where the chemical industry is an important sector – the EU Commission gave way and agreed to hand over free allocations to certain sectors, which were considered ‘at risk’ of carbon leakage.

Cefic lobbied intensively to ensure that as many sectors of the chemicals industry as possible were included in this list of sectors ‘at risk’. When a draft list was published in April 2009, Cefic complained that its needs had not been adequately considered, even though most of the sectors it wanted included were included. However, after meetings between Cefic and the Commission, it succeeded in securing a place for both the fertiliser and nitrogen compound sectors on the all-important ‘at risk’ list.

Lobbying by Cefic also helped secure an early publication date of the list of ‘at risk’ sectors, which are to be excluded from the auction process. The EU Commission had wanted to publish this list after the climate talks so as not to influence the outcome, but Cefic and others successfully pushed for this to be brought forward, giving the industry greater certainty.

According to the Greens, these compromises were a “dramatic retreat” from earlier commitments. The Greens and environmental groups had called for full auctioning of emissions permits from 2013. Green MEP Caroline Lucas, a shadow draftsperson on the original legislation, noted: “The proposals on ETS… risk creating a monster. Allocating such a large proportion of emissions permits for free … would turn the ETS into a windfall profit machine for Europe’s most polluting industries.”

Under the adopted ETS proposal, industries that account for over three quarters of all emissions (outside the power sector) will now receive some free permits – with only the most polluting factories required to buy permits from the market.

Cefic was asked to comment on its nomination for the Angry Mermaid Award but did not respond.