Carbon Trading Hitting Europe's Chemical Industry?

As the forthcoming Copenhagen Climate Summit in December gets
nearer, concerns are being voiced regarding the potential impact of the next phase of the EU Emissions Trading Scheme.

The UK Times newspaper has expressed serious concerns that the level of regulation in Europe is increasingly forcing companies to relocate in regions with less stringent regulation.

The European Commission has reacted to this threat of 'carbon leakage' by giving some exemptions to the compulsory purchase of carbon credits when the next phase of the Emissions Trading Scheme comes into force. The credits will be based on benchmarks for each industrial sub-sector. The principle is that the most efficient are rewarded, whilst the less efficient have an incentive to invest and improve.

The principle is laudable, but in a global marketplace, it can only work in practice if all regions of the world adopt the same standards. If not, the effect can only be to speed up the migration of refining and chemical industries to other regions outside of Europe.

Higher feedstock and labour costs are already making things difficult for European manufacturers. Whilst there is no doubt that a drive to reduce emissions is necessary, a solution has to be found to ensure that regulation affects all regions equally.