Memorandum by Brunner Mond
The European Commission is proposing to amend
Annex 1 of Directive 2003/87/EC in order to include the production
of soda ash (Na2CO3) and sodium bicarbonate (NaHCO3) in the EU
Emissions Trading Scheme (EU-ETS).
This evidence addresses the Committee's interest
in the proposed process of Allocation and Auctioning of permits
(items 6 and 7 in the Committee's call for evidence) and the damaging
effects on Brunner Mond's UK manufacturing operations if an auctioning
process is adopted for the soda ash and sodium bicarbonate business.
The European Commission is proposing
to include the production of soda ash and sodium bicarbonate in
EU-ETS, with emission permits issued by auctioning.
The cost of purchasing emission permits
would amount to 13% of the current sales price for soda ash, and
could not be absorbed within our very narrow profit margins.
Brunner Mond, in common with the
rest of the EU soda ash and sodium bicarbonate industry, is exposed
to international competition.
Our international competitors have
surplus capacity, and would be expected to increase their shipments
to the EU if the introduction of EU-ETS put the domestic industry
at a cost disadvantage.
Capital investments made by Brunner
Mond in recent years have significantly reduced our CO2 emissions.
Soda ash supplied by our international
competitors has a higher carbon footprint than that produced in
our own plants, even before emissions due to shipping are taken
Inclusion of the soda ash and sodium
bicarbonate industry in EU-ETS on an auctioning basis will therefore
result not only in carbon leakage but also an increase in total
global CO2 emissions. A process of free allocation based on benchmarks
should be adopted to prevent these negative consequences.
A common approach across the industry
in the EU is the correct way forward; individual Member States
should not be allowed to make separate decisions as this will
lead to an unfair distortion of trade within the EU.
1. BRUNNER MOND'S
UK MANUFACTURING OPERATIONS
Brunner Mond is the only UK producer of sodium
carbonate (soda ash) and sodium bicarbonate. These are strategic
raw materials for the nation, being essential to the manufacture
of many everyday items such as glass, detergents, foods and pharmaceuticals.
Based in Northwich, Cheshire the company manufactures about one
million tonnes of product at its two sites, Northwich West and
Brunner Mond and its predecessors have been
manufacturing soda ash in Northwich since 1873. In 2000 a new
CHP plant, owned and operated by Powergen CHP (now E.ON), was
commissioned. Brunner Mond then closed its old coal-, oil- and
gas-fired integrated power stations and entered into an over-the-fence
relationship for the supply of steam and electricity.
1.1 Technical description of Brunner Mond's
Brunner Mond, like all European soda ash producers,
manufactures soda ash using the ammonia-soda process. The ammonia-soda
process was developed by Ernest Solvay in the 1860s and subsequently
licensed to John Brunner and Ludwig Mond, the founders of the
original Brunner, Mond & Company.
Manufacture of soda ash
The primary raw materials for the ammonia-soda
process are sodium chloride brine (salt), limestone and coke.
The process can be represented as a double decomposition between
sodium chloride and calcium carbonate to produce sodium carbonate
and calcium chloride (Equation 1).
However, the reaction between sodium carbonate
and calcium chloride will not proceed unaided. The critical steps
involve the use of ammonia absorbed into the brine to generate
alkalinity and the carbonation of the alkaline brine using carbon
dioxide of carefully controlled strength and chemical quality.
This precipitates impure ("crude") sodium bicarbonate
leaving ammonium chloride in solution (Equation 2).
Carbon dioxide for the carbonation reaction
is produced by burning limestone with coke (anthracite is an alternative)
in vertical shaft kilns, in which the operating conditions and
raw materials are specified to optimise the carbon dioxide content
of the evolved gas (Equation 3).
The burnt lime is slurried with water to produce
a milk of lime solution (Equation 4), a highly alkaline medium,
which is used to liberate free ammonia from the ammonium chloride
solution (Equation 5). The liberated ammonia is recycled to the
Soda ash is obtained from the crude sodium bicarbonate
precipitated in the carbonation reaction (Equation 2) by thermal
decomposition (Equation 6). The carbon dioxide so liberated is
recycled back into the carbonation reaction.
The chemical kinetics require an excess of carbon
dioxide to provide the driving force for carbonation and this
excess is lost as unreacted carbon dioxide in the waste gas. The
quantity of carbon dioxide produced at the kilns is also dependent
upon the lime demand for ammonia recovery. Under certain circumstances
it is necessary to waste excess carbon dioxide prior to carbonation
to maintain the overall chemical balance.
Manufacture of sodium bicarbonate
The crude sodium bicarbonate precipitated in
the carbonation reaction (Equation 2) is not of sufficient purity
for sale. Instead, sodium bicarbonate is manufactured by carbonating
an aqueous solution of soda ash (Equation 7).
The co-production of sodium bicarbonate on an
ammonia-soda process soda ash plant can significantly reduce the
need to waste carbon dioxide. However, the capacity to produce
it is limited in that if too much sodium bicarbonate is made then
it becomes necessary to waste lime to maintain the chemical balance.
In summary, the ammonia-soda process relies
on complex recycles of carbon dioxide, ammonia, water and energy.
Over the 140 years since its invention, these recycles have been
optimised both for cost and environmental considerations. It is
vital that the process is viewed in totality rather than as independent
The ammonia-soda process must not be confused
with conventional lime (calcium oxide) production, where there
is no similar demand for the carbon dioxide produced. For this
reason, it is not included as a scheduled process in the context
of the current emissions trading regulations and is exempt under
the Climate Change Levy (Fuel Use and Recycling Processes) Regulations
A more detailed description of the ammonia-soda
process can be found in the Process BREF for Soda Ash prepared
by the European Soda Ash Manufacturers Association, a Sector Group
A graphical representation of the ammonia-soda ash process (taken
from the BREF) is given in Appendix 1.
1.2 Carbon Dioxide Emissions
Energy in the form of steam is required for
the thermal decomposition of crude sodium bicarbonate to soda
ash (Equation 6) and for the recovery of ammonia (Equation 5).
In addition, both steam and electric power are required for driving
a range of machinery on the soda ash plant, including the compressors
for the carbon dioxide gas.
All of the steam and electric power requirements
for Brunner Mond's UK soda ash plants are generated by a gas-fired
combined heat and power (CHP) plant located adjacent to our Winnington
site. The Winnington CHP plant was commissioned in 2000, and represented
an investment of £130 million. The plant is owned and operated
by the CHP division of E.ON UK (formerly Powergen).
The Winnington CHP plant is one of the most
efficient power plants in Europe, with a combined thermal and
electrical efficiency of 85%. The plant has total annual CO2 emissions
of 750,000 tonnes. However, Brunner Mond consumes only 25 MW of
the 120 MW electricity generated by the plant; the remainder is
exported to the National Grid.
Using Environment Agency guidance on allocating
CO2 emissions from CHP plants, the emissions associated with the
steam and electricity consumed in Brunner Mond's UK plants are
calculated to be 450,000 tonnes per year. This is equivalent to
0.5 tonnes CO2 per tonne of soda ash.
It should be noted that in investing in a state-of-the-art
energy generation facility, Brunner Mond has substantially reduced
its carbon dioxide emissions. The CHP plant replaced three aging
boiler plants, which burnt a mixture of coal, natural gas and
oil. The old boiler plants emitted 900,000 tonnes of CO2 in producing
the steam required for our factories, but generated only 25 MW
In summary, commissioning of the Winnington
CHP plant resulted in:
a reduction in CO2 emissions from
900,000 t/yr to 750,000 t/yr; and
an increase in electricity generation
from 25 MW to 120 MW.
Since the extra electricity is exported to the
National Grid, emissions associated with steam and electricity
consumption in Brunner Mond's UK soda ash plants have been reduced
by over 50% from 900,000 tonnes per year (equivalent to 1.0 t
CO2/t soda ash) to 450,000 tonnes per year (equivalent to 0.5
t CO2/t soda ash).
Although the majority of carbon dioxide generated
in the limekilns is absorbed into the finished products, there
is inevitably some loss of unreacted carbon dioxide from the carbonation
and bicarbonation reactions. The amount of unreacted process carbon
dioxide released from Brunner Mond's UK plants is 200,000 tonnes
per year, equating to 0.2 t CO2/t soda ash.
1.3 Cost impact of inclusion of soda ash manufacture
in Phase 3 of EU-ETS
Carbon dioxide emissions arising from energy
generation were included in Phases 1 & 2 of EU-ETS. Emissions
arising from the process of manufacturing soda ash are proposed
for inclusion in Phase 3.
The total emissions (energy and process) associated
with manufacturing a tonne of soda ash at Brunner Mond's UK plants
are 0.7 t CO2/t soda ash. Taking the European Commission indicative
price for emission allowances of 30/t CO2, it can therefore
be calculated that purchasing emission permits will increase Brunner
Mond's UK production costs by £15/t soda ash. This would
represent a 13% increase in our production costs.
The soda ash business operates on very narrow
margins such that the additional costs arising from EU-ETS will
have to be passed on in full to our customers if the business
is to remain viable. However, the next section of this document
will demonstrate that our ability to pass on the cost increase
is highly constrained by competitors, who will not be subjected
2.1 EU soda ash demand
The estimated 2007 demand for soda ash in the
EU is 8.7 million tonnes.
The principal user of soda ash is the glass industry, accounting
for over 60% of demand. Other important customers include the
chemicals industry and the detergents industry. The current breakdown
of soda ash demand in Europe is illustrated in Figure 1.
EU SODA ASH MARKET BY END USE
Soda ash is a critical raw material in the production
of glass, representing approximately 20% of the weight of the
It is also the most expensive raw material in proportion to the
amount used, accounting for around 60% of a glassmaker's raw material
Acting as a fluxing agent, soda ash lowers the melting temperature
of the silica sand and therefore reduces energy consumption. There
is no substitute for soda ash in the glass-making process. Increased
recycling of glass reduces, but does not eliminate the need for
virgin raw materials.
Flat glass is used to make the windows in buildings
and cars. In order to improve energy efficiency, building regulations
across Europe increasingly specify the use of double or triple
glazing and low-emissivity energy-saving glass. These requirements
are increasing the demand for raw glass and hence for soda ash.
Glass containers are still very important for
packaging food and drinks, despite competition from PET and other
plastic packaging materials. Glass containers are much easier
to reuse and recycle than those manufactured from plastic, and
glass remains the preferred packaging material for premium products
such as wine and beer. The last few years have seen an increasing
quantity of wine being imported from Australia and South America
in bulk and bottled locally in Europe, a practice that brings
a number of environmental advantages.
The prospects for the European glass container industry are therefore
stronger than they have been for many years.
The category "other glass" includes
glass wool insulation. Demand for this product is growing due
to the need to increase the energy efficiency of buildings, and
there are plans for a number of new factories across Europe.
2.2 EU soda ash producers
There are six producers of soda ash in the EU,
with a total nameplate capacity of 9.3 million tonnes per year
EU PRODUCERSCAPACITY AND PRODUCTION
|Producer||EU Capacity (t)
||EU Manufacturing Locations|
||Germany (2 plants), France, Spain, Portugal, Italy, Bulgaria*
|Ciech||1,900,000||Poland (2 plants), Germany, Romania
||UK (2 plants), Netherlands|
*The Bulgarian plant is a joint venture between Solvay and Sisecam, with each partner being allocated a proportion of the output.
In addition to the above, BASF manufactures a small amount
of soda ash as a by-product at plants in Belgium and Germany.
In 2007, EU soda ash production is estimated to have been
8.9 million tonnes.7 The majority of the soda ash plants in the
EU are currently operating at or close to their nameplate capacities.
The two plants in Romania are an exception to this, as they are
currently benefiting from investment by their new owners. By operating
their plants at full capacity, the EU producers are able to maximise
operating efficiencies and minimise production costs, thus remaining
competitive against imports.
Around 84% of the soda ash produced by EU producers in 2007
was sold on the EU market. The majority of the 1.4 million tonnes
exported outside the EU, comes from the plants in Spain, Bulgaria
and Romania. Latin America is the principal export market for
the Spanish plant, whilst product from Bulgaria and Romania is
exported to a variety of destinations including the Balkans, Africa
and the Middle East.
2.3 Suppliers to the EU soda ash marketproducers
The EU producers supplied around 87% of the 8.7 million tonne
EU demand in 2007. The remainder was supplied by imports. Figure
2 shows an estimate of how the EU market was split between domestic
producers and importers.
EU MARKET SHARE OF DOMESTIC PRODUCERS AND IMPORTERS (2007
Solvay and Sisecam also import soda ash into the EU from
their plants located outside the EU. Sisecam is responsible for
all of the imports from Turkey and Bosnia. Solvay has a plant
in the USA, but is only responsible for a small proportion (less
than 2%) of the imports from that origin. The majority of imports
from the US and all imports from Russia and the Ukraine are by
companies that have no manufacturing presence in the EU.
Although Brunner Mond's parent company, Tata Chemicals and
GHCL also manufacture soda ash in India, they are not currently
importers to the EU. Brunner Mond/Tata Chemicals has a plant in
Kenya. Tata Chemicals recently acquired General Chemicals of the
USA which supplies part of the US material imported into the EU.
The EU-wide market shares illustrated in Figure 2 mask the
fact that the sales by the various suppliers are not distributed
evenly across the EU market. As a bulk commodity, soda ash is
expensive to transport in proportion to its value, so producers
have a strong incentive to sell as much of their output as possible
close to their manufacturing plants. The pattern of trade is therefore
normally that sales are made either in the country of manufacture
or the immediately neighbouring countries.
Similarly, imports are not evenly distributed across the
EU market. Importers tend to sell their product as close as possible
to the port of import, in order to minimise land transportation
costs. Thus imports from the US are concentrated in the western
parts of the EU, with over 50% landing in Brunner Mond's core
markets of Belgium and the Netherlands. (Table 2).
DISTRIBUTION OF US EXPORTS TO EUROPE (2007)
|Destination||Tonnes||% of total
*A proportion of the soda ash landing in Belgium and the Netherlands is transhipped and forwarded to the UK and Scandinavia.
Imports from Turkey are concentrated in countries along the
Mediterranean coast of Europe whilst imports from Russia and the
Ukraine are found in Poland, the Baltic Countries and other countries
that can be accessed by sea (Figure 3).
DISTRIBUTION OF IMPORTS TO THE EU
2.4 International exposure of the EU soda ash industry
According to the criteria elaborated by DG ECFIN, a sector
is supposed to be internationally exposed if:
the trade ratio is > 20% (extra-EU exports
+ imports/domestic EU production);
the import ratio is > 10% (extra EU imports/domestic
EU production); and
CO2 cost/sales price ratio is > 5%.
For soda ash:
the trade ratio is 29%;
the import ratio is 13%; and
the CO2 cost/sales price ratio is 13% (Brunner
Mond UK figures).
Therefore the EU soda ash industry clearly qualifies as being
internationally exposed under the official definitions.
3. POTENTIAL THREAT
FROM US IMPORTS
3.1 US soda ash producers
There are five producers of soda ash in the United States
of America (see Table 3). All of the US producers manufacture
soda ash from the mineral trona. Four of the producers are located
together in Green River, Wyoming, where they extract trona from
underground mines. The exception is Searles Valley Minerals, which
is located in California and manufactures soda ash from trona
extracted from lake brines.
US SODA ASH PLANTS
||2 plants. Nippon Sheet Glass has a minority stake
|Solvay||2,500,000||Asahi Glass has a 20% stake
||Owens-Illinois has a 25% stake|
|Searles Valley Minerals||1,300,000
||Acquired by Nirma in January 2008|
*Tata Chemicals, the parent company of Brunner Mond, has recently acquired General Chemicals.
3.2 Production of soda ash from trona
The US soda ash producers refer to their product as "natural
soda ash", a name that has now slipped into common usage.
In fact there is no such thing as naturally occurring soda ash.
The mineral trona is actually an impure form of sodium sesquicarbonate,
and it requires considerable energy-intensive processing in order
to convert it into soda ash with a sufficient purity to compete
with that produced via the ammonia-soda process.
Most soda ash production in the United States is by the monohydrate
process. The trona ore is first calcined at around 200°C
in order to convert it to crude sodium carbonate (Equation 8).
This step also serves to destroy some of the organic impurities
contained in the ore.
The crude sodium carbonate is dissolved in water, allowing
insoluble mineral contaminants to be separated by filtration and
soluble organic contaminants to be removed using activated carbon.
The solution is then evaporated, resulting in the precipitation
of sodium carbonate monohydrate (Na2CO3.H2O). The monohydrate
crystals are washed before being calcined at about 150°C
to produce soda ash.
Carbon dioxide emissions
The monohydrate process requires significant amounts of energy
for the evaporation and calcination steps; published figures
suggest that a typical plant uses 6.1 GJ energy per tonne of soda
ash. Unlike Brunner Mond, the Wyoming soda ash producers have
not invested in modern Combined Heat and Power plants, and so
do not export electricity to the US network. Furthermore, they
have switched to using coal instead of natural gas for their energy
requirements on cost grounds. The CO2 emissions associated with
the energy requirements of a typical monohydrate process plant
are therefore estimated to be 0.6 t CO2/t soda ash.
Note that carbon dioxide is evolved during the initial calcination
of the trona ore (0.15 t CO2/t soda ash). This carbon dioxide
serves no further role in the production process, and is simply
vented to the atmosphere.
The total emissions of a typical US monohydrate process soda
ash plant are therefore estimated to be 0.8 t CO2/t soda ashie
fractionally more than the 0.7 t/t emissions of Brunner Mond's
UK soda ash plants.
Carbon dioxide footprint of US soda ash delivered to the EU
US soda ash for supply to Europe is first transported by
rail from the plants in Green River, Wyoming to the port of Port
Arthur in Texas, a distance of around 1,500 miles. It is then
loaded into ships for the 5,000 nautical mile journey to Europe.
The estimated carbon dioxide emissions resulting from the transportation
to Europe is 0.11 t CO2/t soda ash (0.05 t/t from rail transport
plus 0.06 t/t from ship transport).
The total carbon dioxide footprint of US soda ash delivered
to Europe is therefore 0.9 t CO2/t soda ash. This compares with
0.7 t/t for soda ash produced at Brunner Mond's UK plants.
Transport from the European port of import to the end customer
is typically by lorry. These emissions are excluded from the above
calculation, as they are equivalent to those arising from transporting
soda ash from a European production plant to the end customer.
3.3 Exports of soda ash from the United States
The capacity of the US soda ash industry greatly exceeds
the US domestic demand, and the US soda ash industry is therefore
dependent on exports in order to fully utilise this capacity.
Table 4 details the sales by destination of the US soda ash industry.
US SODA ASH SALES DESTINATIONS 2007
||% of total|
| US Domestic||6,070,000
|Former Soviet Union||50,000
|Africa and Middle East||260,000
The four Wyoming-based soda ash producers are members of
the American Natural Soda Ash Corporation (ANSAC), an export trade
association benefiting from exemption from US anti-trust laws
under the Webb-Pomerene act. ANSAC does not operate in Canada
or the EU. Export sales by the ANSAC members to all other markets
are handled exclusively by ANSACie the individual ANSAC
members do not compete with each other for sales in these markets.
ANSAC applied for permission to operate in the EU market
in 1988, but this was refused by the European Commission.
However, the Commission decision left open the possibility of
co-operation in matters relating to the transport and storage
of soda ash. The US producers therefore formed another Webb-Pomerene
association known as the American European Soda Ash Shipping Association
(AESSA). All of the US soda ash producers are members of AESSA
(Searles Valley Minerals, which left ANSAC in 2004, appears to
have maintained its membership of AESSA).
AESSA allows the US soda ash producers to coordinate their
shipping activities to Europe. Vessels bringing soda ash to Europe
often contain product from two or three producers. Storage sheds
at European ports are also shared between the producers. The US
producers are therefore able to benefit from considerable economies
of scale in exporting to Europe.
3.4 Behaviour of the US soda ash producers on the EU market
According to US export data, US soda ash producers have shipped
570,000 tonnes of soda ash to Europe in 2007. The quantity of
soda ash shipped from the US to Europe has fluctuated dramatically,
as can be seen from the historical data presented in Figure 4.
US SODA ASH SHIPMENTS TO EU-27 (1989-2007)
The US soda ash producers have at times been extremely aggressive
in selling their surplus production on the EU market. The European
Commission found the US producers to be dumping on three occasions
(in 1982, 1984 and 1995) and imposed anti-dumping duties.
The graph in Figure 4 illustrates how the US producers have
been able to increase their shipments to Europe rapidly in response
to changing market circumstances.
Shipments were increased by 250,000 tonnes in 1991 and by
a further 260,000 tonnes in 1992 in response to the withdrawal
of anti-dumping duties in September 1990. They then fell back
after new anti-dumping proceedings were launched in August 1993.
Anti-dumping duties were again repealed in October 1997,
and 1998 saw US shipments to Europe increase by 140,000 tonnes.
The weakness of the Euro relative to the Dollar in the period
1999 to 2002 reduced the attractiveness of the European market.
However, the relative strength of the two currencies started to
reverse in late 2002, with the result that 2003 saw shipments
jump by 260,000 tonnes.
The sudden surges of US imports have been extremely disruptive
to the EU soda ash industry. In 1993, three soda ash plants in
the EU with a total capacity of one million tonnes per year were
shut down, largely in response to the rapid growth in US imports
over the previous two years. In 2002-03 Brunner Mond decided to
reduce the capacity of its Netherlands plant by 100,000 t/yr,
and a 160,000 t/yr soda ash plant in Austria was closed in 2005.
3.5 Anticipated response of US producers to the introduction
After the formation of the ANSAC export cartel in December
1983, the US soda ash industry was able to achieve significant
annual increases in export sales. Throughout the 1980s and up
to the late 1990s, the US soda ash producers expanded their capacity
aggressively in anticipation of continuing strong export growth.
The Asian financial crisis of 1997 and then increased competition
from China in the markets of East and South-East Asia left the
US producers with considerable surplus capacity. Although the
global market has tightened significantly in the last few years,
the US producers still have an estimated 1.5 million t/yr of mothballed
capacity that could be brought on stream if there were sufficient
financial incentive to do so.
In February 2008, FMC announced that it would be restarting
0.7 million t/yr of currently mothballed capacity at its Granger
plant in the period 2009-12. The additional production will be
sold entirely on the export market.
The US soda ash industry has proved very effective at lobbying
the US government in order to protect its interests. There are
numerous examples of diplomatic pressure being brought to bear
on countries that are perceived to be putting trade barriers in
the way of US soda ash exports, or which try to ensure that ANSAC
complies with their national anti-cartel legislation.
The United States has not ratified the Kyoto Protocol, so
there is no immediate prospect of the US soda ash industry being
put under any pressure to reduce its CO2 emissions. In fact, the
US soda ash industry was recently able to use its lobbying power
to obtain a reduction in the US federal royalties for trona extraction
from 6% to 2% on the basis of the intense competition that it
claimed that it was facing in the international market. This reduction
in taxation was granted at the same time as the industry was increasing
its CO2 emissions by converting from natural gas to coal.
Despite itself being free from any threat of carbon taxation,
the US soda ash industry is well aware of the opportunity presented
by the potential imposition of emission charges on its overseas
competitors. Recent lobbying material
has sought to portray their product as having a lower environmental
impact than that produced by the ammonia-soda process. Their comparisons
are based on plants in China, which have much poorer energy efficiency
than Brunner Mond's plants, and also neglect to consider the impact
We have no doubt that if an auctioning basis is used when
EU-ETS is extended to the European soda ash industry, the US soda
ash producers will use this as an opportunity to increase their
sales to the EU at the expense of the indigenous producers.
4. POTENTIAL THREAT
There are four soda ash producers located in Russia (Table
5). The two larger plants produce soda ash via the ammonia-soda
process, whilst the small plants use a unique process in which
soda ash is produced from the mineral nepheline as a by-product
of alumina manufacture. The soda ash produced by the nepheline
process is of a lower quality, and is not sold outside the Former
SODA ASH PLANTS IN RUSSIA
| Soda Sterlitamak||2,100,000
*Soda ash is a by-product of alumina production from Nepheline ore.
The nameplate capacity of the Russian plants dates from the
Soviet era, when large capacities were built up to serve the needs
of the Soviet Union and its Comecon trade partners. When the Communist
system collapsed at the end of the 1980s, much of this production
capacity became surplus to requirements and was mothballed.
Since the late 1990s, this mothballed capacity has been gradually
brought back on stream, with the result that Russian production
has grown by an average of 6% per annum since 1997. Demand in
Russia is also growing at about 6% per year, but a proportion
of the increased production is finding its way on to the export
market (Figure 5). In particular, exports to the EU have increased
by 130,000 tonnes in the last three years.
RUSSIAN EXPORTSTOTAL AND EU (1997 -2007)
Most of the Russian producers' domestic sales are conducted
through a single trading organisation, ETK, enabling them to command
artificially high prices. They are therefore free to sell their
excess production on the export markets at very low prices. The
Russian soda ash producers are also able to access low-cost gas,
coal and anthracite, giving them a substantial cost advantage
over the EU producers.
Both the Sterlitamak and the Berezniki plants have investment
programmes in place, which will see continued growth in their
production in the period to 2010. Our projections suggest that
the production increase will be more than is required to satisfy
the growth in domestic demand over the period, so the amount of
Russian soda ash available for export to the EU is expected to
Carbon footprint of Russian soda ash delivered to the EU
The large Russian producers use the same manufacturing technology
as Brunner Mond, but with poorer efficiencies and lower environmental
standards. They have not invested in Combined Heat and Power plants,
and with the lower costs of gas and coal in Russia have little
incentive to do so.
Prior to the investment in the new CHP plant, Brunner Mond's
plants emitted a total of 1.2 t CO2/t soda ash. It can be assumed
that a typical Russian soda ash plant will have emissions of at
least this level.
As with imports from the US, emissions from transport must
be taken in consideration when evaluating the carbon footprint
of Russian soda ash sold in the EU market.
Almost all of the Russian soda ash sold in the EU comes from
the Sterlitamak plant. To reach the EU, soda ash must first be
transported by rail to either St Petersburg on the Baltic Sea
or Novorossiysk on the Black Sea, both of which are approximately
1,500 miles from Sterlitamak. Transport from St Petersburg to
Antwerp by coastal shipping involves a further journey of just
under 1,400 nautical miles.
The carbon dioxide emissions resulting from the transport
of Russian soda ash to Antwerp are estimated to be at least 0.09
t CO2/t soda ash. This gives a total carbon footprint of over
1.3 t CO2/t soda ash, far in excess of the 0.7 t CO2/t soda ash
for domestically produced soda ash.
5. SODIUM BICARBONATE
Brunner Mond manufactures sodium bicarbonate as a downstream
product. The production of sodium bicarbonate is dependent on
the production of soda ash.
Sodium bicarbonate has a much more diverse range of applications
than soda ash. Key application areas are pharmaceuticals (including
haemodialysis), food, animal feed, personal care (eg toothpaste)
and household cleaning products. Demand for sodium bicarbonate
in the EU is growing strongly.
An increasingly important application for sodium bicarbonate
is Flue Gas Treatment. Sodium bicarbonate is one of the most effective
substances available for the abatement of acid gases (principally
hydrogen chloride and sulphur dioxide). With new legislation specifying
ever-lower emissions limits, we are predicting that demand will
continue to grow strongly.
Like soda ash, Brunner Mond's sodium bicarbonate business
must compete with companies importing sodium bicarbonate into
the EU. In the case of sodium bicarbonate, the main competition
comes from Russia and Turkey.
Brunner Mond currently sells 16% of its sodium bicarbonate
production outside the EU. We are one of the few producers of
sodium bicarbonate in the world whose product meets the demanding
standards required by the pharmaceutical industry, so our product
is able to command some price premium. Nevertheless, a unilateral
cost increase arising from EU-ETS would put these valuable export
sales in jeopardy.
Brunner Mond's soda ash business operates on extremely narrow
margins. The additional costs generated if EU-ETS is introduced
on an auctioning basis would make the production of soda ash unprofitable.
The threat from competition from suppliers that would not be subjected
to this charge would prevent us from passing on the full additional
costs to our customers.
The likely consequence of the inclusion of the EU soda ash
industry in EU-ETS as currently envisaged (ie through the full
auctioning of carbon permits) is the closure of a large proportion
of the industry and the substitution of domestic soda ash with
imports from Russia and the United States. This would deprive
key downstream industries of a reliable raw material supply and
also result in a net increase in global carbon dioxide emissions.
For the above reasons, the optimum solution would be that
the soda ash industry should be excluded from EU-ETS until such
time as a global emissions-trading scheme is established which
encompasses its overseas competitors. However, given that the
Member States wish to include the industry in Phase 3 of the EU-ETS,
it is essential that emissions allowances are granted free of
charge according to a benchmarking system. Benchmarks can be established
for the level of CO2 emissions generated in a good quality manufacturing
process with manufacturers being required to purchase allowances
only where they fail to meet this standard. Such an approach would
provide an incentive to achieve the best quality (lowest carbon)
manufacturing performance and lead to the lowest possible carbon
footprint for the strategic raw materials of soda ash and sodium
bicarbonate in use in the EU.
For such an approach to be successful it is critical that
the auctioning decision is taken at an EU level and is not delegated
to individual Member States to make separate determinations as
this would lead to an unfair distortion of trade within the EU
and potentially even favour manufacturing operations with heavier
carbon footprints than the exemplars that do exist within the
18 June 2008
AMMONIA SODA PROCESS
Block Diagram of the Soda Ash Manufacturing process extracted
from the Process BREF for Soda Ash prepared by the European Soda
Ash Manufacturers Association.5
(The Process BREF for Soda Ash was prepared by the European Soda
Ash Producers Association (ESAPA) and submitted to the European
IPPC Bureau in Seville for the preparation of the Large Volume
Inorganic Chemicals BREF). Back
Unless otherwise stated, all references to the EU are to the 27-member
union that has existed since 1 January 2007 ("EU-27"). Back
Calculated from production and export figures produced by CEFIC
statistical service on behalf of the European Soda Ash Producers
Association (ESAPA) (2007 full-year data for EU-25); estimated
production in Romania and Bulgaria; and Eurostat import data (year
to October 2007). Back
From 2007 figures produced by the CEFIC statistical service on
behalf of ESAPA. Note that the figures are for sales by ESAPA
members in the EU-25. However, the inclusion of sales by non-ESAPA
members and of the Romanian and Bulgarian market would not alter
the picture significantly. Back
UK glass manufacture-a mass balance study (British Glass-2003). Back
Pilkington and the Flat Glass Industry 2007 (Pilkington
Group Ltd). Back
Bottling wine in a changing climate WRAP case study June
From 2007 US export data. Excludes exports to Lithuania, as these
are for onward shipment to Russia. Back
2005-06 World Soda Ash Update Chemical Market Associates
Inc (CMAI). Back
From production data published by the United States Geological
Survey and US export data. Back
Commission Decision 91/301/EEC. Back
ANSAC Washington Bulletin October 2007. Back