How do industrial activities affect climate change?

The EU has set a 2050 climate neutrality target, the science is clear that achieving the Paris Agreement objective of keeping the average global temperature rise below 1.5C requires stepping up short-term action now. According to the UNEP emissions gap report, global emissions need to fall 7.6% per year every year for the next ten years, starting now. Otherwise, the ability of economic development is seriously compromised. This means that the European Union must revise its 2030 target to be on a trajectory to climate-neutrality and reduce its GHG emissions by at least 65%, tackling both direct and embedded emissions. Such effort will require increasing ambition across all policies, first by increasing EU’s energy efficiency and renewable energy targets respectively to 45% and 50%.

The industry has a big role to play in delivering this transition, this also includes agriculture. Greenhouse gas (GHG) emissions from resource and energy-intensive industries covered by the IED, such as steel, cement and chemicals, currently represent 19% of total European GHG emissions. Emissions from these sectors, which are in the magnitude of some 425 million tonnes CO2 per year, have not decreased since 2012, and according to the European Environment Agency, are not predicted to do so until 2030.

As highlighted under the air quality section, it is worth highlighting that just 1% of all 14,325 assessed facilities were responsible for 50% of the total damage costs, and just 11% were responsible for 90% of total damage costs. Those are large combustion plants (LCPs), refineries and iron and steel plants where significant combustion activities take place, predominantly from fossil origin. The damage costs mentioned under “agriculture” cover only a subset of industrial-scale “agricultural” activities covered by the IED, namely intensive pigs and poultry rearing farms above a high threshold of animal number. However, it excludes cattle or aquaculture. Those activities generate a lot of methane emissions that also occur from manure handling and spreading. Those off-site emissions are not accounted for under the PRTR reporting or IED reporting (unless occurring on-site).

Methane or N2O emissions are not covered by the EU-ETS either, these are powerful GHG. Further, certain large-scale industrial activities, such as underground coal mining and landfills, release a significant amount of GHG (methane) emissions. Even if operators report those emissions, they are so far not subject to any regulatory requirements within the IED or EU-ETS, pointing to a legal gap.

Key IED provisions concerning climate change

In each member state, national or regional authorities must consider the Best Available Techniques contained in sector-specific reference documents called BREFs when issuing permits for activities covered by the IED. There are over 50,000 IED permit holders across the EU, and ensuring that they do use the most effective techniques to prevent and abate pollution is key to reduce the environmental impacts of industrial activities.

While protecting the environment and addressing pollution at large, the IED does not address climate pollution directly due to limitations brought by the EU ETS Directive of 2003 (Article 26 took out GHG from the IED) now in Article 9 of the IED, prohibiting permit writers to set an emission limit on that gases, if the GHG emission from an installation is “specified” in the scope of the EU ETS Directive and “unless necessary to ensure that no significant local pollution is caused”.

Despite energy efficiency being a common BAT and permit content requirement, the EU ETS Directive (Article 26(2) / IED Article 9(2) renders those requirements optional for installations subject to the EU ETS system). The Emission Trading System (ETS) Directive is taking an exclusive “market based” approach. Installations covered under the ETS should buy EU emissions allowances (EUAs) at the market price to be able to pollute. The overall cap is reduced each year, which means that fewer allowances are available and therefore emissions are reduced over time in line with the overall EU climate target as well as EUA prices are foreseen to raise. However, more than 90% of industrial greenhouse gas emissions are in fact exempted (free ETS emissions allowances).

These policy-induced constraints need to be fixed in the upcoming IED review. The EEB advocates for a “combined approach”. See notably EEB’s position on the IED review and EEB’s position on the ‘FitFor55’ package.

What is the role of BREFs? Techniques to prevent climate change and support decarbonisation

Due to limitations imposed by the EU ETS “market-based approach” only, the BREF so far only provide for BAT that indirectly prevents climate change and support decarbonisation. There are however some exceptions. Some illustrations are provided below.

The IED and the BREF review rule require that an overall high level of environmental protection should be achieved, pollution shall be prevented at source and energy to be used efficiently. One of the top BAT determinations relates to “fuel choice”, requiring a switch to inherently cleaner fuels. Many Best Available Techniques (BAT) Conclusions under the IED do contain performance-based energy efficiency standards, yet those are left “optional” to Member States (permit writers as per Article 9(2) of the IED) because of the EU ETS Directive (Article 26) or because the BAT Conclusions themselves label those as “indicative” (case of the Food Drink and Milk Industries BREF).

There is a strong correlation between GHG reduction and stricter air pollution, fuel or efficiency standards for industrial activities. Check out the EEB IPDV database to see those plants failing to comply with air pollution BAT-levels.
• Based on the previous correlation aspect, the Ferrous Metals Processing (FMP) BREF, under finalisation, also contains a BAT ‘to use electricity from fossil-free energy sources’.
• A 2012 study of the JRC already found that a gradual replacement of LCP boilers, based on the 2006 BAT-based efficiencies, would translate to a saving of 756 million tons of oil equivalent (2011-2030), leading to primary energy saving of about 14-18%, with CO2 savings of 2.7 Gt compared to 2011 levels. Those standards have in the meantime evolved (see: 2017 LCP BREF) and energy efficiency benchmarks are more ambitious (44% net for lignite, 46% hard coal and >60.5% net for gas Combined Cycle Gas Turbines). This means that significant energy saving and GHG mitigation potential in industrial and power sectors is available with current technologies. For example, if Germany followed the Dutch example by requiring its coal operators to meet binding BAT-based minimal energy efficiency levels (set at 44%) , the German government could have forced a phase-out of its pre-1990 coal/lignite boilers without any risk of biomass switching and costly compensation claims
• The 2017 LCP BREF [link section LCP BREF] sets binding BAT-AELs on methane emissions from spark-ignited lean-burn gas engines (BAT 45)
• The Food Drink and Milk (FDM) BREF goes beyond the Montreal Protocol and sets BAT on substituting refrigerants that do show a global warming potential / or are ozone-depleting substances. The same provision is considered under the ongoing Slaughterhouses BREF (SA BREF). The FDM sector is a large consumer of refrigerants with ozone depletion or global warming potential. The yearly leakage is big, up to an order of 40% with refill requirements, leakage of refrigerants reduces the energy efficiency of equipment and hence increases energy consumption and generates additional emission of GHG caused from energy use. Leakage in the EU is substantial and estimated to be about 10% on average (in the case of 11000 refrigeration systems with >3 kg refrigerants). Implementing the BAT on substitution of those refrigerants with GWP and proper maintenance in the FDM sector alone would lead to substantial energy savings and associated GHG emissions (possibly greater than 30%). The emission reduction potential for Slaughterhouses is not quantified yet
• There is also a BAT Conclusions on the FDM sector promoting solar energy to be used for (sugar beet) pulp drying (see BAT 35 c of the FDM BREF)
• Within the ongoing Ceramics Manufacturing BREF (CER BREF) review, it is planned to provide for a dedicated data collection on decarbonisation. It is premature to conclude that a dedicated BAT-Conclusions on decarbonisation will end up in this BREF but the signals are very positive.

How you can make a difference

The EEB believes that BAT conclusions must address decarbonisation and support the decarbonization of industrial activities. The EU ETS “limitations” claimed mainly by industry, sometimes supported by national governments, shall be ignored. There is no duplication of regulation vis-a-vis the ETS Directive, as hinted by IED recitals (9 and 10), because both frameworks are complementary and follow different approaches. The EU-ETS is a market-based instrument to meet climate targets by setting a price on carbon, whilst the IED and BAT concept seeks to base environmental performance on what is technically feasible. As highlighted above, BAT-C already addresses decarbonisation indirectly.  

The EEB asks for an overhaul of the EU ETS and related IED provisions so to make the IED also fit for the required climate ambition.  Within the EEB submission under the Targeted Stakeholder Survey, we called notably on the following: Chapter III (and Annex V) of the IED are to be replaced by a “climate ambition and 2040 carbon neutrality” chapter. This chapter should provide clear forward-looking measures, milestones and targets for relevant industry sectors, a detailed action plan for how carbon neutrality and zero pollution ambition should be implemented for industrial activities.

Further climate-relevant aspects are mentioned in the following EEB publication:

We are interested in gathering the following information:

  • Examples of fuel switching (from fossils to sustainable/renewables) as well as electrification of furnaces/crackers in IED activities and data on associated emission reduction benefits.
  • Examples of techniques used for decarbonisation of industry that can be implemented in a pre-2040 timescale, in particular in the following industrial activities: iron and steel, cement and lime production, chemicals manufacturing, ceramics manufacturing, foundries, green hydrogen.
  • Research and data support on NGO project “Energy Generation BREF”

Please provide information by directly uploading data to the EEB decarbonization collaboration folder on sharepoint

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