The European Chemical Industry against global competition : why energy efficiency matters Vassos Efthymiadis Hellenic Association of Chemical Industries 2/5/2014Enerrgy efficiency workshop1

a/ The global Chemical Industry in numbers 2/5/2014Enerrgy efficiency workshop2

 It accounts for18% of the global chemical market  It consists of 29,000 companies (96% SME’s)  It employs 1,1 mil. People  Has a turnover of € 558 bn  Creates a trade surplus of € 49,2 bn The European Chemical Industry in 2012 Sales 2012: € 558 bn (market share %)

Global chemical output has almost doubled in 10 years, mainly because of the emerging markets … 2/5/20144Enerrgy efficiency workshop

… but the market share of the European Union was halved in the past 20 years. 2/5/20145Enerrgy efficiency workshop

China is dominant in capital spending for the Chemical Industry … 2/5/20146Enerrgy efficiency workshop

… whereas the E.U. is last in capital intensity (capital expenditure / turnover) 2/5/20147Enerrgy efficiency workshop

b/ The Chemical Industry in Europe 2/5/2014Enerrgy efficiency workshop8

War against climate change : Greenhouse gas emissions have been halved over the last 20 years, with a simultaneous increase in production of 50% 2/5/20149Enerrgy efficiency workshop

The energy cost is rising … (ethylene cost: USA vs. ΕU) 2/5/201410Enerrgy efficiency workshop

… together with the bureaucratic barriers. Constantly rising number of E.U. laws governing health, safety and the environment Statistics (1%) Animal protection (1%) Health (10%) Environment (43%) Consumers (45%) 2/5/201411Enerrgy efficiency workshop

Constantly decreasing R&D expenditure 2/5/201412Enerrgy efficiency workshop

c/ The Chemical Industry in Greece 2/5/2014Enerrgy efficiency workshop13

320 enterprises Turnover of 2 bn Euros 15,000 direct employees 0,4% of the European chemical industry Intense export activity 2/5/2014Enerrgy efficiency workshop14 Sector size

40% turnover reduction since 2008 European banking crisis Greek debt crisis Even larger economic contraction in sub-sectors related to construction The paint industry has lost 45% of its turnover 2/5/2014Enerrgy efficiency workshop15 Sector trends

The most over-regulated sector of insutry Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) Classification, Labeling & Packaging (CLP) Significant increase in the administrative costs 2/5/2014Enerrgy efficiency workshop16 Sector characteristics

d/ European Industrial and Climate Strategy 2/5/2014Enerrgy efficiency workshop17

The European Industrial Policy (DG Entrepreneurship and Industry) No industry, no growth, no jobs 3 mil. jobs lost since 2008 Increase of Industry contribution to total GDP from 15% today to 20% in 2020 Implementation of “fitness checks” before any new legislation is passed, to assess the resulting repercussions on economic and industrial competitiveness “Cumulative impact assessment” of new legislation 2/5/2014Enerrgy efficiency workshop18

The European Climate Change Strategy The target for greenhouse gas emissions has been over-achieved for 2012 (-12% instead of -8%, which was the initial target set in Kyoto) Further proposed reduction by 20% until 2020 and 30% until 2030 Emphasis - and generous subsidies - on Renewable Energy Sources 2/5/2014Enerrgy efficiency workshop19

The effect on the European Chemical Industry Decrease in competitiveness, mainly because of high energy cost and bureaucracy As a result, we observe simultaneous reduction in - market share - employment - capital investment and R&D expenditure 2/5/2014Enerrgy efficiency workshop20

The effect on the environment Between 1990 and 2012, CO2 emissions : - were reduced in Europe by 12% - were increased in China, India, the U.S.A. and Japan by 293%, 198%, 14% και 4% respectively As a percentage contribution to global CO2 emissions in 2012 : - Europe represents only 11% and will represent just 5% in 2030, if our climate targets are fulfilled - China represents 29% 2/5/2014Enerrgy efficiency workshop21

e/ Energy cost policies 2/5/2014Enerrgy efficiency workshop22

1. Competitive energy policy The chemical industry is especially energy – consuming and is subjected to global competition. Unified European Energy Market More competition between energy providers Reduction of cost differential between MS Reduction of taxes / tariffs that are a result of other European policies but are burdening the big energy consumers Encouragement of R&D investment towards the improvement of energy efficiency A more systematic approach towards shale gas exploration 2/5/2014Enerrgy efficiency workshop23

2. Responsible Climatic Policy Often, the EU sets climatic targets without evaluating the repercussions on European competitiveness : Greenhouse gas emissions reduction cannot be the only target that interests European policymakers Focus on the stable supply of competitive sources of low- emission energy. Harmonization of climatic targets with the need for competitive energy cost Avoidance of unilateral climatic targets and need for global agreements 2/5/2014Enerrgy efficiency workshop24