Indirect Compensation for the Cement Sector under EU ETS

With letters to the Ministry of environment and water, Ministry of finance, Ministry of Economy and Ministry of Energy, BACI informed the state authorities about the following position:

The European Commission made a decision, earlier than expected, regarding the list of sectors eligible for indirect compensations. To our regret, the cement is not in the list of eligible sectors for indirect compensations.

Having come up with several statements during the proceedings, we, acting via CEMBUREAU, sent a final letter with our position to EC Vice President Vestager, attached to this message, with our position.

We know, for example, that the Polish government is trying to include fertilizers in the list.

Eligibility for indirect compensation is of crucial importance to enable the transition of our sector to carbon neutrality. Reaching carbon neutrality will not only require significant investments in innovation and technology but will also entail a sharp increase in operational costs, more specifically, electricity costs. Increase in electricity demand will indeed range between 50% and 120%, as a result of the implementation of key technologies to decarbonize cement production. This will happen as electricity costs in the cement sector represent 50% of energy costs, which ranks the cement sector, along with lime, as the highest in terms of share of electricity costs in total production costs.

The lack of eligibility of the cement sector will seriously impair the ability to create viable business plans that should help the industry on its path to carbon neutrality.

It should be noted that the main criteria for the Commission to exclude the cement sector from the eligible ones was the trade intensity, which for the European cement sector was below the 20% threshold. The Bulgarian Cement Industry is one of those examples that are extremely affected to carbon leakage and trade intensity as an average for the years 2012-2018 is significantly higher than the 20% (based on data of National Statistical Institute) and this trend was maintained in 2019 and until today.

Cement Industry Statement in an open letter.