challenges of working in an eu environment

europiaWORKSHOP IN PORTOROZ, 10th and 11th of April 2003

Challenges of working in an EU environmentChallenges of working in an EU environmentChallenges of working in an EU environment

Peter Tjan

Secretary General, European Petroleum Industry Association

(EUROPIA)


• Formed in 1989 as Association of Companies

• Represents interests of EU oil refining, distribution and marketing industry to the EU Institutions

• Covers 95% EU refining capacity

• Members present in all EU-15 + Norway, Switzerland and accession countries

• Small Brussels-based Secretariat

- Independent Secretary General- Executive staff on secondment from Member Companies

EUROPIAEUROPIAEUROPIA


• BP

• Cepsa• ENI• ERG• ExxonMobil • Fortum • Hellenic Petroleum

• Kuwait Petroleum International• MOL• OMV

• Petrogal

• Petrol d.d.• Phillips-Conoco• PKN-Orlen• Repsol-YPF• Saras• Shell

• Statoil• Chevron-Texaco• TotalFinaElf

EUROPIA Member CompaniesEUROPIA Member CompaniesEUROPIA Member Companies


MEDIASOCIETY

EUROPIA

National OilIndustry Ass.

IPIECA+ API

EU PARLIAMENT

COREPER /COUNCIL

UN Bodies- UN-ECE- IMO / MARPOL- WHOEU

COMMISSION

UNICE & FEBIs

CONCAWEOGP &OCIMF

NGOs

EUROPIA - Key StakeholdersEUROPIA EUROPIA -- Key StakeholdersKey Stakeholders

IEA-OECD


EUROPIA: A Wide Range of IssuesEUROPIA: A Wide Range of IssuesEUROPIA: A Wide Range of Issues

Environmental Business Structure Products

Climate Change Energy Supply Fuel Specifications

Air Quality/CAFE Taxation - Automotive

Water Quality Competition - Jet/Marine/HO

Waste Management Economics Instruments Chemicals white paper

Operations EU Enlargement Future Fuels

Transport Policy


Action GroupsAction Groups

AFAG : Automotive Fuels / World Fuel Charter / Non conventional fuels

AIR QUALITY AG : Ozone / LCPD / NEC / AQ Daughter Directives / SLFD

INDUSTRIAL SITES AND ENVIRONMENT AG : Environmental & products matters related to industrial sites - excluding Air Quality and Automotive Fuels

LEGAL AG : Environmental liability / enlargement / EU matters

ECONOMICS AG : Macro economics / EURO / EMU

TAX AG : All tax related subjects / Fiscalis / SLIM

COMPETITION AG : Agencies / vertical / horizontal agreements

PRODUCTS HARMONISATION AG : Year 2000 fuels specs. / Jet fuels/ LPG specs.

PRODUCT HANDLING & : VOCs Stage 1 & 2 / safety of transportEMISSIONS AG

SOE AG : Refinery equipment standardisation

ENERGY POLICY AG : Climate Change/ Energy & Transport policy / Strategic stocks


EU accession:An abundance of issues to be addressed

EU accession:EU accession:An abundance of issues to be addressedAn abundance of issues to be addressed

• Product specifications• Environment:

- Air Quality (CAFÉ)- Water Quality- Climate Change: KYOTO / Emissions Trading

• Health & Safety- Risk Assessments (Chemicals White Paper)- Environmental Liability

• Security/Energy Policy- Emergency stocks, supply management- Renewables incl. BioFuels- Transport policy- Energy efficiency- Infrastructure

• Taxation- Diesel tax harmonisation- Energy Taxation

• ……


Significant Reductions in European Road Transport Emissions from Past Measures

Significant Reductions in European Road Transport Significant Reductions in European Road Transport Emissions from Past MeasuresEmissions from Past Measures

0

20

40

60

80

100

120

140

1990 1995 2000 2005 2010 2015 2020

CO NOx PM-diesel VOC Benzene SO2 CO2

Roa

d Tr

ansp

ort

Em

issi

ons

% o

f 199

5 le

vel

Source : European Commission

CO2

Air Quality target year

Specification changes increaserefinery CO2 emissions


• Major contributions to road transport emissions have already been made by vehicle and fuel technologies

• Further changes in fuel specification, beyond current European levels, have a very limited impact on air quality

• Conflicts of environmental priorities will occur (CO2 / Regulated pollutants)

• Non-fuels measures (such as transport management, stationary sources etc.) and local applications may be the best way forward

• Results refocussed the attention on a further reduction in fuel sulphur levels to assist new automotive technology introduction

General Conclusions from the Auto-Oil II ProcessGeneral Conclusions from the AutoGeneral Conclusions from the Auto--Oil II ProcessOil II Process


Incorporation

• 2% biofuels required in gasoline and diesel fuel pool in 2005 in each Member State market

• Increasing by 0.75% per year to 2010 (5.75%)

• Need for mandatory blending into each litre of product to be reviewed by 2006

Biofuels DirectivesBiofuels DirectivesBiofuels Directives

Taxation

• Reduction in excise duties between 1 January 2002 and 31 December 2010

• Tax exemption proportional to percentage of incorporated biofuel

• Max. 50% - full tax reduction allowed for public transport and taxis

Commission Policy Basis

• Reduce transport CO2 emissions and secure energy supply


• No real technical problem within the limits of the Fuels Directive

EUROPIA Position on BiofuelsEUROPIA Position on Biofuels

• Not cost effective as regards CO2 reduction : 100 Euro/ton CO2 avoided v.s. EU objective < 20 Euro/ton

• Limited availability : maximum 2% of EU automotive fuels based on set aside land

• Three times as expensive as oil based products

• Member States situation vary as regards : land availability, climate, agriculture, economy ...

⇒ Flexibility should be left upon Member States to decide on biofuels policy


• Covers 45% of EU CO2 emissions (power, chemical, refineries, cement, glass, pulp and paper)

• Mandatory for sectors covered

Draft Directive on GHG Emissions TradingDraft Directive on GHG Emissions Trading

• 3 steps :

- Sites get permission to emit CO2 through a GHG emissions permit

- Member States allocate allowances (right to emit 1 ton of CO2) to sites- Sites can trade allowances and must cover for their yearly emissions with

enough allowances

• Timing :

- First period : 2005-2007- Review of scheme in 2007

- Following : 5 years period


• EUROPIA supports a European trading scheme involving :

Emissions Trading : EUROPIA Key IssuesEmissions Trading : EUROPIA Key Issues

• A fair allocation :

- to be free of charge (EU industry competitiveness)- to ensure a level playing field (difficulty of burden sharing)

- to account for the detrimental effect of other EU legislation- to be decided early enough for industry to adapt

(6 months for 1st period, 2 years later on)

• Consistency of legislation for industry participating :

- no energy tax

- no energy efficiency constraint (IPPC related or other) either


The Future Challenge : Solving the Coming Major Imbalances

The Future Challenge : Solving the Coming Major The Future Challenge : Solving the Coming Major ImbalancesImbalances

-40

-30

-20

-10

0

10

20

30

40

50

60

Gasoline Jet/Kero Gas/Diesel Fuel Oil Total Products

Mt

1998 2000 2005 2010 2015 2020

Surplus

Deficit


The EU has the highest energy tax level compared to the USA and The EU has the highest energy tax level compared to the USA and JapanJapan

$ 490EUEU

2,5%

EUEU

$ 335JapanJapan

0,9%JapanJapan

$ per capita$ per capita

$ 130USAUSA

0,5%USAUSA

% of GP% of GP

EU – USA – JAPAN EU EU –– USA USA –– JAPAN JAPAN


COMMERCIAL ROAD TRANSPORT EC diesel proposal

COMMERCIAL ROAD TRANSPORT COMMERCIAL ROAD TRANSPORT EC diesel EC diesel proposalproposal

2003 2004 2005 2006 2007 2008 2009 2010 2011

Germany = 440Germany = 440

Greece = 245 Greece = 245 (rest of EU between 253 and 403)(rest of EU between 253 and 403)

UK = 742UK = 742

250

450

742

Proposed rate level for excise and similar leviesProposed rate level for excise and similar levies

350

@ 416@ 416

central rate (indexation max. 2.5%) with bandwidth (200 in 2003)central rate (indexation max. 2.5%) with bandwidth (200 in 2003)to become uniform rate in 2010to become uniform rate in 2010


Issues for the local industriesIssues for the local industriesIssues for the local industries• “More” is happening in Brussels, less “at home”• Existing legislation reflects consultation with EU-15 only• EU sets minimum standards• Implementation often left to Member States• Need to respect “Single Market” philosophy

• Expertise required at MS and local industry level• Coherent and knowledgeable industry representation:

- to influence local governments and policy makers- To have a credible voice in Brussels- To collect data

• Share practices among accession country industry

challenges of working in an eu environment

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