Climate Neutral Player
The new Fit for 55 package addresses climate challenges and impacts our industry, but we will play a role in helping Europe meet its goals
Regulatory Affairs Manager
Energy consumption increased slightly in 2020 to 91.6% from the 2019 level of 90.8%, taking 2011 as the reference year.
Slight increase in energy consumption
From 2011 to mid-2018, Euro Chlor noted a decline in energy consumption, mainly associated with the phase-out of mercury technology. The recent small rise may be explained by a slight increase in the electricity usage of the electrolysers. This in turn may be due to the aging of membranes and electrodes or perhaps higher steam consumption as an effect of lower operating rates. It is expected that energy use will stabilise in the coming years as there are no new large developments in the pipeline. This will partly be the effect of aging (resulting in an increase), renewal of membranes and electrodes (resulting in a decrease) and conversion of older technologies to more modern zero-gap technologies (resulting in a decrease).
Fit for 55 and potential consequences for chlor-alkali
Following several Euro Chlor Energy Task Force meetings on various topics throughout the year, Euro Chlor has been updating members on the potential consequences for our sector of the Fit for 55 package launched in July 2021.
This new comprehensive and interconnected package sets challenging new climate targets for 2030. Euro Chlor and Cefic have analysed more than 3000 pages of the 12 legislative proposals.
Following, some highlights:
Energy efficiency targets and policies have been one of the cornerstones of EU energy and climate policy. Fit for 55 plans to increase the greenhouse gas (GHG) emission reduction target for 2030 to at least 55% from 40%. To achieve this, there is a need to significantly step up energy efficiency efforts (measured in absolute primary energy consumption) by 2030 to 39% from the current target of 32.5%. The chlor-alkali sector continues its efforts to increase its energy efficiency where possible, although options are limited (see Energy Consumption above), to help the EU reach this target.
With the revision of this Directive, the EU aims to ensure that renewable energy fully contributes to achieving higher emission reductions by 2030. The proposal aims to increase the use of renewable energy by 2030 from 32% to 40%. Additionally, there is an indicative target for industry to increase renewable energy use by 1.1% per year. The proposal also states that 50% of overall hydrogen used in industry in 2030 for feedstock and energy must come from renewable fuels from non-biological origin (meaning water electrolysis or derived sources). Our hydrogen by-product might be seen as renewable if we use (additionally installed) renewable electricity.
GHG emission reduction targets for 2030 will be increased from 43% to 61% compared to 2005. Our sector is mainly indirectly influenced by electricity prices as the power sector falls under the ETS. Here we can contribute by buying more renewable energy and looking for renewable energy sources to produce the steam.
These are being reviewed and altered into the Climate, Environmental Protection and Energy Aid Guidelines (CEEAG). Euro Chlor has always supported an overall broader approach to decarbonisation, emphasising the importance of technology neutrality and coverage of all decarbonisation initiatives. Regarding the current category of aid given to energy-intensive industries for renewable surcharges, a tightening of eligibility criteria and higher cost exposure is expected.
The proposal is currently open for feedback until 12 November 2021. It currently deletes the existing provision allowing Member States to lower the level of taxation down to zero for energy-intensive businesses. The latter will be eligible for tax reductions, but not below the minimum tax level.
Euro Chlor produces some 270,000 tonnes/year of hydrogen on average. Even though it is our ambition for 2030 to use 100% of this, currently we do not. This year, hydrogen utilisation even decreased from 89.1% in 2019 to 82.3% in 2020, which is the lowest figure in 19 years. This may be explained by less stable production levels, making it more difficult to utilise the hydrogen outlet. The Hydrogen Task Force (TF) will further investigate the reasons for this decline in 2020, as well as the barriers that prevent our members from realising 100% utilisation (see article below).
6.8% decrease in hydrogen use versus last year
Euro Chlor launches its own Hydrogen Task Force
Mid-2020, Euro Chlor launched a Hydrogen TF on behalf of Cefic to serve as a platform for discussion and data collection on hydrogen across the whole chemical industry. The overarching activities of this group were taken over by a new Cefic Hydrogen Network of Experts. Meanwhile, Euro Chlor continued hydrogen-related activities in its own Euro Chlor Hydrogen TF. Our members have been discussing the first results of the data collection on the production and utilisation of hydrogen in our sector and are in the process of mapping out the barriers, difficulties, and opportunities for reaching 100% hydrogen utilisation.
Hydrogen as a by-product from chlor-alkali production is low carbon
Given the EU ambition to become climate neutral and the existence of an ambitious EU Hydrogen Strategy, Euro Chlor aims to increase the awareness of the availability of our high-quality low carbon hydrogen. For instance, in its taxonomy on financing sustainable growth, the European Commission is defining the criteria for green hydrogen produced from water electrolysis but does not yet consider chlor-alkali electrolysis.
One of our first actions was to develop a new infographic showing how low carbon our hydrogen is. It even scores better than water electrolysis in terms of energy efficiency and carbon neutrality.