Document: Commission plans softer carbon costs for chemicals, cement

The European Commission is considering softening its proposed benchmarks for free allowances for chemicals and cement in the next phase of the EU Emissions Trading System, according to an internal Commission document obtained by POLITICO.

The Commission is due to issue new benchmarks in April that determine how many free allowances various sectors will receive between 2026 and 2030.

Chemicals are the big winners under the revised numbers, with much softer benchmarks for a wide range of products from plastics to hydrogen. S-PVC plastic, for example, would see its benchmark reduced by between 6 per cent and 20 percent, rather than the originally-proposed 27 percent to 34 percent.

That, in simple terms, would mean plastic producers would have to buy fewer ETS permits to cover their emissions than under the Commission’s earlier plans. Permits currently cost around €80 a ton of CO2.

Cement producers are also winners. The new benchmark for grey clinker cement, for example, is proposed to be between 10 and 17 percent below the original benchmark set in 2005. Originally the Commission had been considering lowering the benchmark by between 13 and 20 percent. Other forms of cement had similar reductions.

The document, dated Jan. 21, stressed that the benchmarks were “preliminary” and subject to change.

“Softer benchmarks for cement and chemicals are unsurprising [as] these sectors are hardest to abate, with limited technological options and high costs,” said Dan Maleski, lead CBAM advisor at Redshaw Advisors. He added benchmarks for steel producers were largely unchanged.

The Commission will open a review over the ETS legislation later this year, in what is expected to be one of the biggest climate fights of the year.