Risk and Chances for the Lime Industry through the European
Emissions Trading System
Dipl.-Ing. Andreas von Saldern,
ESolutions GmbH, Germany
1
Since 2005
European Emissions Trading System
EUAs
CO2
CO2
CO2
CO2
10.000 Installations
2
CO
CO2 2
The Europe-wide CO2–Emissions Trading System (ETS) exists since
autumn 2004
•It includes installations of energy intensive industries like
power stations, steelworks, cement, lime, bricks, ceramic…
• Verified reports of CO2-emissions have to be generated,
annually
• An equivalent number of CO2-Emission Allowances
have to be submitted to the authorities
• Companies receive less CO2-Emisson Allowances
than they need
• Lacking CO2-Emission Allowances have to be bought,
surpluses can be sold
• Sales can be conducted between plant operators (OTC) or
via Stock Exchange (e.g. Leipzig, London, Paris…)
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Direct CO2–dependency in Germany
CO2–Emissions of different industries in relation to sales
kg CO2/€ revenue (before emission trading)
20
15
10
5
0
lime
power
(coal)
cement
power (gas)
steel
paper
brick
4
NF-metals
ceramic
glass
chemistry
refractory
Trading Periods
• the first trading period lasted 3 years, from 2005-2007
• the second trading period lasts 5 years, from 2008-2012 and
• the third period will last 8 years, from 2013-2020. The basic
rules have been fixed for the third period, some important details
will be determinied in 2009 and 2010
 Reduction Target by the end of 2020:
Setting I: -21% compared to the emissions of 2005
Setting II: -30% if an ambitious Kioto II agreement will
passed
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Allocated Emission Allowances in the European Emissions Trading
System
MtCO2/year
2500
2179
2000
1500
2083
1st
Trading
Period
1000
1720 (-21%)1
1525 (-30%)²
2nd
Trading
Period
3rd
Trading
Period
500
0
year
2005
−
2007
2008
−
2012
2013
1
−
2020
reduction based on 2005 emissions
6
2
if Kioto II occurs
CO2-prices for 1st and 2nd trading period differed significantly in 2007
€/t CO2
35,00
30,00
25,00
20,00
15,00
10,00
5,00
0,00
Jan. 07
Apr. 07
Jul. 07
Spot 2007
Okt. 07
Jan. 08
Apr. 08
Jul. 08
Sep. 08
Dez. 08
Dec08 Future
Source: ECX
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Forwarding production from 2008 in 2007 add 24 € profit / ton
production
price
revenue
profitability
profit
10.000 t lime / year
emission factor
60 € / t lime
CO2 emissions
CO2 reduction
600.000 € / year
10%
amount of CO2 reduction
60.000 € / year
CO2 price
value of CO2 reduction
percentage of revenue
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1,1 t CO2 / t lime
11.000 t CO2 / year
10%
1.100 t CO2 / Year
22 € / t CO2
24.200 € / year
40%
What does a 21% reduction requirement mean?
21 % per product at 0% annual growth
42 % per product at 2% annual growth
62% per product at 5% annual growth
since 2005
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Current number of installation covered through the European Emission
Trading System
Countries
Number of Installations
Austria
31
Belgium
294
Czech Republic
394
Denmark
374
Estonia
50
Finland
572
France
1004
Greece
141
Germany
1665
Italy
934
Ireland
106
Latvia
73
Lithuania
98
Luxembourg
14
Malta
2
Netherlands
341
Portugal
212
Romania
217
Slovenia
89
Spain
1006
Sweden
743
United Kingdom
925
EU (total)
10
9285
Industries which have to comply with the European Emissions Trading
System
Industries covered by the European Emissions Trading System (ETS)
Combustion Emissions from various industries especially utility services
Mineral Oil Refineries
Coke Ovens
Metal Ore Roasting and Sintering
Production of Pig Iron and Steel including Continous Casting
Production of Cement Clinker
Production of Lime
Production of Glass
Manufacture of Ceramic products
Pulp and Paper Production
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The prices for CO2-Emission Allowances are highly volatile
€/t CO2
35,00
30,00
25,00
20,00
15,00
10,00
5,00
0,00
Jan. 08
Mrz. 08
Mai. 08
Jul. 08
Dec 09 Future
Sep. 08
Nov. 08
Jan. 09
Source: ECX
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Different price predictions of CO2-Emission Allowances
Analysts predict a significant price increase
Citibank
Phase II
Phase III
(2008-2012)
(2013-2020)
20-25 EUR/t
20-25 EUR/t (2013-15)
50 EUR/t (after 2015)
Barclays Capital
Société Générale
Deutsche Bank
9 EUR/t (2009)
EUAs: 45 EUR/t (2013-20)
20,50 EUR/t (2010-12)
CERs: 35 EUR/t (2013-20)
17-20 EUR/t
23 EUR/t in 2013
25-30 EUR/t
(fundamental)
<10 EUR/t (temporary)
Fundamental Price (incl. cost of carry of 4%)
48 EUR/t in 2020
Point Carbon
12-35 EUR/t (increasing)
Daiwa House
13-16 EUR/t (increasing)
Source: EET-Mac
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“Process”-emissions can hardly be influenced
Lime production emits 1.0 to 1.9 t CO2/t lime
CO2-emissions which are caused by the lime production
CO2
100%
30%
80%
fuel
60%
dissociation
40%
70%
20%
0%
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The duties of enterprises which have to comply with the European
Emissions Trading System include:
• Monitor their CO2-emissions
• Compose an annual CO2-emissions report
• Let the report be verified through an external accredited verifier
• Submit an according number of CO2-Emission Allowances
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The cost for CO2-Emission Allowances can lead to losses
Euro/ Product
Contribution to profit
30
20
10
CO2-price
0
10
-10
20
30
40
loss
50
60
Euro/tCO2
EF= emissions factor in t
CO2/product
example:
Contribution to profit = 25 €
16
Reducing production can become profitable
€
40
Contribution to profit per
product
Contribution to profit
30
Break even
20
Profit by selling
equivalent amount of
CO2-Allowances
10
€/tCO2
10
20
30
40
CO2 - price
17
50
60
What impact does a 10% CO2 reduction have ?
10% reduction of CO2 would lead to
40% increase of profit
• At a price of 22 € / t CO2 (average 2008)
• 1 t CO2 / t lime
• at10% profitability (profit / revenue)
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A holistic CO2-Management offers the best chances
permission
purchase of
fuels and
commodities
allocation of
free EUAs
energy
consumption
CO2
monitoring &
reporting
purchase &
sell of CO2
allowances
CO2-controlling & risk management
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distribution /
production /
planning
consideration of
CO2 allowances
in balances & tax
The CO2-Emissions Trading System offer new opportunities - Harvest
them!
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Contacts:
Dipl.-Ing. Andreas von Saldern
CEO /
Accredited Environmental Verifier
Dr. oec. Susanne Achilles-Kuhnhardt
Director Sales and Marketing
Schoppastraße 2
D-65719 Hofheim a. Ts., Germany
Close to Frankfurt Airport
Phone:
+49 (6192) 921 99 – 10
Mobile:
+49 (170) 911 84 23
Reinhardtstraße 23 ·
D-10117 Berlin
Phone:
Mobile:
+49 (30) 88 66 37 80
+49 (171) 33 55 377
E-Mail:
Internet:
E-Mail:
Internet:
[email protected]
www.esolutions.eu
[email protected]
www.esolutions.eu
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