Third meeting of the High Level Group: Energy, Feedstock and Logistics
Brussels, 18/04/08

April 18th was the date when the High Level Group (HLG) met for the third time. The meeting was chaired by the Vice President of the European Commission, Günter Verheugen.

Based on the draft final conclusions of the HLG Sub Group on Energy, Feedstock and Logistics and the discussion paper presented at the Sherpa Meeting on second of April the discussion in the High Level Group on this matter was conducted in four parts around the following questions:

• Further strengthening of chemical clusters and related infrastructure
• Diversification of raw materials
• How best to ensure effective and efficient global approach to climate change and
• Addressing climate change as a major business opportunity.

Regarding the issue of “Regional Aspects” the ECRN was asked by the chair to provide an input for the Sherpa Meeting on 18th of September. The ECRN wishes to use this opportunity.

The ECRN played a very active and constructive role in the discussion by developing the strategy on chemical logistics on Central- and Eastern Europe and raising the point of planning security for the chemical industry regarding the special treatment of energy intensive industries.

Position of the European Chemical Regions Network (ECRN) regarding the European Commission’s Renewable Energy and Climate Package from 23 January 2008

At its meeting on 26 March the ECRN General Assembly adopted the following declaration:

1. The European Chemical Region Network (ECRN) welcomes the important proposals of the European Commission on renewable energies and the climate package published on 23 January 2008 with the aim of creating a more coherent energy policy for the 27 Member States after 2012.

2. The Chemical Regions will support this innovative process along the value chain. They have launched an initiative to add a regional dimension to the SusChem-Technology platform in order to provide innovative climate change solutions especially for SMEs.

3. The ECRN generally welcomes the effort of the European Commission to avoid market distortion between companies in different Member States and to take the economic constraints of businesses facing international competition into account by free allocation. The ECRN believes that this is essential.

4. The ECRN, however, underlines the fact that most chemical products and materials result from base organic and inorganic products requiring unavoidable energy intensive thermodynamic processes to yield essential products, such as petrochemicals, agrochemicals, ammonia and chlorine etc.

5. The ECRN stresses that the crucial role of base chemicals in providing new processes and innovative solutions for climate change can only be secured if the chemical industry can maintain their sites in Europe and can improve their competitiveness through further investments.

6. The ECRN therefore calls on the EU’s negotiations regarding the KYOTO process, to strive for clear and binding agreements providing industries with the same carbon price signal amongst the countries and regions with the worldwide highest emission rates, to combat climate change beyond 2012. With other regions in the world becoming increasingly interested in climate change issues, it is particularly vital that Europe uses this opportunity to work together with its major partners.

7. The ECRN calls upon the European Commission to maintain specific regulations for free allocations of ETS-allowances for the energy intensive industries, as long as there is no global level playing field based on an international agreement.

8. The ECRN furthermore demands that the decision about the concrete mechanism of this regulation has to be called upon immediately in the proposals of the European Commission.

9. The energy intensive industries and the chemical regions need planning guarantees for upcoming investment decisions so that the rules for a full provision of free allocation allowances for the whole period can already be defined in this directive at this stage. They could however be subject to revision once an international agreement ensures that there are similar additional environmental burdens for the key competitive regions in Europe. The current Commission proposal to review whether the installations are subject to international competition every three years does not provide the necessary planning guarantees.

10. The ECRN supports a free allocation of emission allowances for industrial installations and combined heat & power sites on the basis of benchmarks over the full period.

11. The ECRN sees a particular burden indirectly placed by additional allowance costs on energy-intensive industries, which have to buy naphtha or produce additional energy. The current European Commission proposal does not provide any solution to this problem. Therefore, a special arrangement is necessary to address this issue. For instance, some of the auction revenues could be used to cover indirect certificate costs of energy-intensive facilities

12. The ECRN underlines the fact that the reduction target of 21% for the ETS sectors on the basis of 2005 has a disadvantageous effect on those sites and Member States which have been active in reducing CO2 emissions at a very early stage, and favours the sites and Member States that have increased their emission. Therefore, the year 1990 should be used as a reference period.

13. The ECRN welcomes the designated alternative of being able to exclude small-emitting sites from emission trading. In order to further cut red tape, the threshold value must be raised from 10,000 tons CO2/year to 25,000 tons.

14. The Chemical Regions also agree on the fact that trade restrictions such as import taxes on raw materials or the so-called double-pricing of raw materials that were introduced by several states within the context of the WTO negotiations should be rated as non-compatible with WTO-measures and should consequently be abolished.

15. The Commission’s proposal requires a more detailed assessment, the clarification of open questions as well as possible corrections regarding several matters in order to avoid undesirable delocalization of production due to climate protection.

Brussels, 26th of March 2008

High Level Group on the Competitiveness of the chemical industry in the European Union

The European Commission launched the work of the High Level Group (HLG) on the Competitiveness of the Chemicals Industry on 10th September 2007. The group consists of senior policy-makers from the public and private sectors together with representatives of civil society. It will examine the factors that determine the competitiveness of the European chemicals industry and will conduct an economic and statistical analysis of the structural changes taking place in the chemicals industry, dealing with questions linked to the sustainable development of the industry.

The group is expected to formulate a set of sector-specific policy recommendations by spring 2009.

European Commission Vice President, Günter Verheugen, responsible for enterprise and industry policy and chair of the HLG, stated that the EU chemicals industry is a world leader today and makes an enormous contribution to growth and jobs in Europe. However, there are clear signs that it is facing unprecedented challenges both from the effects of global change and the expectations of our citizens. With this initiative the EU aims to ensure the right framework conditions for the chemicals industry to continue operating and investing in the EU on a sustainable basis.

The initiative forms part of the EU´s partnership for growth and jobs. The establishment of this Group was first announced in the Communication on Industrial Policy of October 2005 as one of the sector-specific industrial policy initiatives.

In addition to the participation of further Commissioners whose competences cover key issues to be examined by the Group, it also comprises high-level Member State representatives, various regions, the EU chemicals industry and its downstream industries, academia, trade unions, environmental Non Governmental Organisations (NGO´s), and consumer organisations. The European Parliament has also been invited to nominate members of the group. In order to address specific questions and promote reflection, the HLG will seek expertise or contributions from ad-hoc groups of experts.

In recent years the activities of the European Chemical Regions Network have been enhanced by the Commission´s participation in these consultations. It is the first time that a network of regions has taken part in such a high level dialogue. ECRN President Dr. Reiner Haseloff, supported by his Sherpa Thomas Wobben, will represent the ECRN within the HLG. Other Regions will join the thematic Ad-hoc Groups to bring the ECRN´s input into the discussions. The following Groups will be founded under the HLG: innovation and human resources, trade, energy and raw materials, logistics and regional aspects, economy and social requirements.

ECRN President Haseloff outlined in his statement the role of the ECRN and the chemical regions in finding solutions on the ground to key questions regarding competitiveness. He referred to the ECRN as a network which represents nearly 1 million employees in the chemical sector in Europe. He thanked the Commission for inviting the ECRN as the first regional network to take part in such a high level dialogue and he promised that the ECRN will play a pro-active role in the future work of the HLG. In this sense he stated that it will be important to find adequate solutions for energy intensive industries in the future design of EU climate and energy policy. Furthermore he suggested using the HLG for a concerted effort to further develop the integration of chemical sites in central and Eastern Europe. He also announced that the ECRN is currently working with CEFIC on a joint initiative to bring the European technology platform approach closer to the regions. Finally he invited the European Commission to use chemical regions as test beds for better regulation in the future.

Minister Moerman from Flanders, ECRN Member Region, who represents Belgium in the HLG, gave a short summary in her contribution of the experience of dialogue between the Flemish Government and the chemical industry in Flanders, which took place last year.

The chemicals industry plays a key role for the EU. It is a major industry in its own right and at the same time an enabling industry that provides the necessary materials for all the other industrial sectors. With a turnover of € 436 billion (2005) the EU accounts for about 30 % of world chemicals sales. There are approximately 31,000 chemical and pharmaceutical companies in the EU and they employ a total staff of about 1.9 million, or 6% of the overall workforce in the manufacturing industry. SME´s in the EU´s chemical industry account for 30% of sales and 37% of employment.

The EU chemicals industry (excluding pharmaceuticals) is the second leading manufacturing sector in terms of value added per employee. In 2005, the EU chemical industry exported € 110 and imported € 72 resulting in a trade surplus of € 38 billion. With this the chemicals industry accounted for 26% of the total EU manufacturing trade surplus.