Memorandum submitted by the British Cement
Association (U21)
EXECUTIVE SUMMARY
1. The cement industry has been one of the
sectors in the vanguard of those addressing the challenges posed
by climate change and the need to secure a more sustainable future
for all. Internationally, the 10 leading companies have established
the Cement Sustainability Initiative through the auspices of the
World Business Council for Sustainable Development. The UK cement
industry has a Climate Change agreement with the Government and
will be a participant in the European Emissions Trading Scheme.
2. The UK Government has received a significant
degree of international acclaim for its pioneering policies to
tackle climate change. The BCA welcomes the introduction of forward-looking
approaches to environmental and other measures, but believes that
there are important lessons to be learned from the experience
to date in a number of areas. In reviewing its climate change
programme it is vital that the Government learns and acts upon
the experience gained from its own current policies, and those
of the European Union.
3. Any future trade and cap measures should
only be taken at least at an EU wide level, be well considered
and planned and underpinned by clear principles of certainty with
sufficient time allocated for proper implementation.
4. UK level measures, implementing either
EU schemes, or other UK specific policies should involve all those
Government departments with an interest and be integrated with
and complimentary to other policies. They should not have a negative
impact on the competitiveness of domestic industry.
5. To date, industry has been the primary
focus for measures designed to tackle climate change. This base
needs to be broadened to include transport and the domestic sectors.
6. Government should procure by example,
setting the benchmark for a more sustainable built environment
and infrastructure.
7. The UK Chair of the G8 and Presidency
of the EU provides a good opportunity to ensure rigour in EU implementation
of climate change policies, and to explore opportunities for global
trading mechanisms.
THE IMPACT
OF CLIMATE
CHANGE MEASURES
ON THE
UK CEMENT INDUSTRY
1. The UK Cement Industry. The British
Cement Association is the trade and research organisation that
represents the interests of the United Kingdom's cement industry
in its relations with Her Majesty's Government, the European Union
and relevant organisations in the United Kingdom. The members
of the BCA (Buxton Lime Industries, Castle Cement, Lafarge Cement
UK and Rugby Cement) are the major domestic manufacturers of Portland
Cement producing over 90% of the cement sold in the UK.
2. Energy represents approximately 35% of
the variable costs of cement manufacture and it is therefore a
primary concern of the industry to take all cost effective measures
to improve energy efficiency and thereby reduce its emissions
of carbon dioxide.
3. The cement industry supports the principle
of emissions trading. Through their parent companies, Lafarge
Cement UK, Castle Cement, and Rugby Cement are committed to carbon
reductions through the World Business Council for Sustainable
Development Cement Sustainability Initiative, (WBCSD CSI). In
addition, Buxton Lime Industries has undertaken to adopt the commitments
within the WBCSD CSI.
4. UK Climate Change Levy Scheme. The
BCA and its members have Climate Change Agreements (CCA) with
government, signed in 2000, which will deliver a 25.6% improvement
in energy efficiency over the period from the baseline year 1990
to 2010. At the first milestone reporting in 2002 it was on course
to deliver the target with a 13.2% improvement.
5. Ahead of the reporting of the second
milestone phase of the Agreement at the end of this year, the
targets for 2006, 2008 and 2010 have been reviewed by Government
and industry, and revisions agreed. A further review is to be
undertaken in 2008.
6. Trading of Emissions within the UK.
One of the BCA's members, Lafarge Cement UK, is a direct participant
in the UK Emissions Trading scheme. Other members have experience
of trading carbon through their membership of the Climate Change
Levy Scheme.
7. EU Emissions Trading Scheme, (EU ETS).
The industry is one of the sectors prescribed for mandatory
inclusion in the EU ETS, either from its initial implementation
in January 2005, or from January 2008 under the "opt out"
provisions.
8. BCA and its member companies have been
working with Defra, Dti, and their consultants in relation to
the development of the EU ETS and its implementation within the
United Kingdom. These discussions have taken place with Government
and the sector or member company, as appropriate, and have been
supplemented by the discussions of the Emissions Trading Group,
ETG, with Government. BCA is an active participant of the ETS.
9. At the European level, BCA has been working
with other European cement manufacturers, through CEMBUREAU. In
addition to the development of common issues, CEMBUREAU is in
direct communication with the European Commission.
REVIEW OF
THE UK CLIMATE
CHANGE PROGRAMME
10. The cement industry welcomes the opportunity
to comment on the review of the UK Climate Change Programme. With
the prospect of medium- to long-term requirement of greenhouse
gas reductions of 60% or more, all sources of greenhouse gases
must be addressed at an early stage.
11. The UK Government has received a significant
degree of international acclaim for its pioneering policies to
tackle climate change. The BCA welcomes the introduction of forward-looking
approaches to environmental and other measures, but believes that
there are important lessons to be learned from the experience
to date in a number of areas:
11.1 Adoption of realistic timetables for
development of Green house gas (GHG) reduction scheme and introduction
of appropriate measures by the parties concerned.
11.2 Provision of adequate level of certainty
to assist industry and others concerned to make the necessary
commercial decisions.
11.3 No ex post government intervention
in established trading markets.
11.4 Ensuring equitable targets from all
participants in any given scheme, ie no discrepancies such as
in the National Allocation Plans of many other Member States.
12. The Climate Change Levy, (CCL), which
was introduced by the UK Government in 2000, was based on improvements
in energy efficiency as a way to deliver reductions in carbon
emissions. The basis of the EU ETS is the reduction of carbon
dioxide emissions. The development of the two different mechanisms
for measuring, reporting and verification purposes has placed
a significant burden on industry and has introduced the entirely
avoidable issue of working out an equivalence between the two
schemes, as well as possible opt-out opportunities for UK businesses.
13. UK government was aware that the EU
ETS would be introduced in the short- to medium term, yet continued
to pursue its policy of introducing the CCA, then its own Emissions
Trading Scheme, and now insists in trying to run them in parallel
with each-other; it is the most clear cut example of over regulation
of UK industry and has had a direct impact on its competitiveness.
None of its EU competitors has had to negotiate its way through
three separate and incompatible systems within a four year period,
instead concentrating on the one EU wide scheme.
14. BCA has commented directly to Defra
about the Government's proposal to intervene in the current UK
Emissions Trading Scheme. We are concerned at the prospect of
intervention into a market-based regulatory instrument. The intention
of environmental regulation using economic instruments is to deliver
environmental improvement at the lowest cost. It should be left
to the market to decide the price and supply of allowances and
this enables industry to choose between abatement and trading.
With the EU ETS about to start in 2005, any interference in the
UK scheme will provide a poor example and send the message that
emissions trading does not work.
15. Any future cap and trade mechanism for
the other GHGs should have much simpler mechanisms than those
developed for the National Allocation Plan as part of the EU ETS.
DEFRA'S
FIVE YEAR
PROGRAMME
16. BCA understands that Defra is working
on a five year programme to be released this year and a new sustainable
development strategy for early next year. In drafting these programmes
and in considering what new policies it wishes to implement it
is essential that Defra and the Government as a whole should avoid
any scheme to be imposed on business that is not an agreed EU
wide one and learns from the experience to date of UK industry.
17. EU-wide or global trading mechanisms
for the other GHGs are the preferred option for the UK cement
industry.
18. Although the European Kyoto target is
8%, and the UK's contribution is set at 12.5%, the UK Government
has set its own goal of 20% by 2010, with a commitment to implement
the recommendation of the Royal Commission on Environmental Pollution's
longer term 60% reduction by 2050.
19. These ambitions, although environmentally
laudable, fail to take into consideration the way in which they
may be achieved. To date, the Government has implemented its programme
without considering the impact on the competitiveness of UK business.
20. In implementing a future EU-wide or
global trading mechanism for the other GHGs it is vital that there
is parity with other European countries and the Government seeks
to implement the UK's contribution in an equitable way, which
does not have a detrimental impact upon the competitiveness of
domestic industry.
21. Although Government has talked of the
need to address the contribution of transport and domestic energy
usage to climate change, to date it has concentrated the majority
of its efforts towards encouraging or demanding efficiencies and
behaviour change towards industry.
22. For credibility and fairness governmental
action should be broadened beyond this concentration on what industry
can deliver to encompass both of these significant contributors
to climate change.
23. It is vital that there is a coordinated
approach across Government to any review of the Climate change
Programme. From the perspective of the cement industry a clear
understanding needs to be established by HM Treasury, Defra, ODPM
and Dti between environmental taxation, waste policy, construction
and building regulations.
24. Defra, ODPM and Dti has already made
a start to this process via its Sustainable Buildings Task
Force which published its report over the summer and the cement
industry supports its recommendation for the introduction of a
Code for Sustainable Building.
25. Nevertheless, we would caution against
the current push for quick-fixes via off-site production of light
weight prefabricated buildings. Such solutions are short-term
and will not fulfil the future building performance requirements
as climate change results in warmer summers. Investment in our
build infrastructure should be on the basis of permanence for
long-life.
26. As the largest procurer of construction
industry services, Government should be setting the benchmark
for sustainable construction projects for schools, hospitals,
other public buildings, as well as transport infrastructure projects.
These too should not be short term solutions, but look to the
longer term and be based on whole life performance not just initial
or lowest cost. The same principles should be extended to local
government.
UK CHAIR OF
G8 AND PRESIDENCY
OF THE
EUROPEAN COUNCIL
27. Holding the simultaneous Chair of both
the G8 and the EU provides an ideal opportunity for the UK Government
to champion and coordinate it environmental policies. BCA notes
that the Prime Minister has already indicated his Government's
intention to do so.
28. The Joint Implementation and Clean Development
Mechanism (JI & CDM) are important components of the EU ETS
and BCA hopes that the UK will use its time in the Chair of these
two international bodies to promote and foster their use.
29. There has been much comment, not least
from the European Commission itself, on the lack of vigour or
ambition in the National Allocation Plans (NAPS) of many member
states. The UK should use the opportunity of the European Presidency
to reinforce the need for rigorous implementation and regulation
of EU wide schemes to help prevent inconsistencies that can distort
the internal market.
30. The EU ETS is not alone as an emissions
trading mechanism, and other schemes exist outside of Europe.
It would be a positive step if the UK Government could work towards
true international schemes and markets, especially as the EU starts
to consider the other GHGs. Perhaps the UK could explore the possibility
of a role for the World Trade Organisation?
1 October 2004
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