By Keith Nuthall
The European Union’s Council of Ministers has
accepted a proposal that producers and processors of industrial
minerals should be allocated free carbon allowances
under the EU emissions trading system (ETS) until 2030.
The decision, which supports a proposal from the European Commission
(EC), has been made because of concerns that mineral
production could move outside the EU if the industry were
forced to buy such allocations, which is what is generally
The list of sectors qualifying for free emission allowances
covers quarrying and mining of minerals; kaolinic clay
production; and salt extraction.
It also includes the manufacture of all non-metallic mineral
products, with the regulation specifically mentioning the
manufacture of inorganic chemicals, fertilizers, nitrogen
compounds, glass, refractory products, cement, lime and
plaster, as well as ceramic tiles, flags and sanitary fixtures,
clay bricks, tiles and other construction products.
It also covers the manufacture of vitrifiable enamels and
glazes, engobes (slips such as are used to decorate pottery)
and similar preparations for ceramics, enameling and glass.
The ETS is the cap-and-trade system that was established by
the EU and imposes a maximum level of greenhouse gas emissions
that can be released annually by industries covered by the
scheme. These include industrial minerals miners, processors
All companies are allocated allowances, or tradable permits,
which give them permission to emit greenhouse gases up to their
limit or cap - one tonne of carbon dioxide, or the equivalent
amount of two more powerful greenhouse gases, nitrous oxide and
perfluorocarbons, according to an EC report on the
Under ETS rules, most companies are increasingly having to
purchase these allowances, rather than receiving them for free,
which is what happened when the system was launched in 2005.
The allowances are bought at the European Energy Exchange (EEX)
in Leipzig, Germany, or at ICE Futures Europe (ICE), in
But there is concern that, for some sectors that emit a lot
of greenhouse gases, the cost of purchasing these allowances
could become so prohibitive that some companies might move
their operations outside the ETS zone and into jurisdictions
which do not apply such charges. The ETS zone covers the EU
plus Norway, Iceland and Liechtenstein.
If companies moved outside the zone, their greenhouse gases
would still be released and the EU would lose employment and
general taxation – a process called "carbon
So the EU has decided to grant free allowances to these
sectors, which also include steel production, textiles, oil and
gas, and some food manufacturing.
This move was also prompted by concerns about the customers
of EU industrial mineral companies. "Allocation reduces the
costs for European industries that can arise if they cannot
pass on such costs through the supply chain," the EC report
High-emitting sectors already have free allocations of
carbon allowances until 2020. Ministers have now agreed that
they will be granted free allocations for 2021-30, with amounts
to be determined according to their past emissions.
The amounts to be allocated will now be assessed using
carbon data submitted by industries via their national
The EC report said that 6.3 billion allowances were
available for qualifying industries between 2021 and 2030.
While the value of these allowances depends on market prices
when sold, the report said that the sum "could be in the order
of €100 billion [$113 billion]."
The mineral sector could command a large proportion of these
allowances, with the EC report saying that the manufacture of
cement alone accounts for about 19% of ETS industrial
The minutes for the Council meeting (general affairs) that
took the decision on April 9, said: "The carbon leakage list
has economic significance because free allowances have a
substantial financial value."
These free allowances will now be distributed unless the
European Parliament objects, but no objection is expected.