http://www.fertilizerseurope.com/documents/Black%20and%20white

THE STORY.....

in black and white.....

Feeding 48% of a growing population.....

Most efficient producers globally.....

Offering almost 50% emissions reduction....

Exporting jobs......

Increasing greenhouse gas emissions.......

Endangering Europe’s self-reliance for food......

................WITHOUT FERTILIZERS................HUMAN LIFE IS UNSUSTAINABLE...........

Europe’s self-reliance for food can not be endangered by what is written in the small print. Rules should be clear and in Black & White. In setting benchmarks the average best 10%� rule should apply.

Current benchmark targets set by DG CLIMA will result in plant closures to the fertilizer industry in Europe. The production capacity of these plants will move to locations in close proximity to Europe with less restrictive emission policies and less effective production practices.

If production moved to Russia for example an extra 37,000,000t/CO2/kg would be emitted.

48% Fertilizers

Europe’s offer of reduction in GHG emissions for ammonia and nitric-acid plants.

Double the

overall EU target of 20% by 2020.

DG CLIMA target for ammonia and nitric-acid plants is an unjustified

75% reduction. double our offer and almost 4 times Almost

the overall EU target.

Europe’s fertilizer industry is the most exposed industry to carbon-leakage.

After a rigorous analysis process of 258 sectors the European Commission has deemed the fertilizer industry to be the industry most exposed to carbon leakage.

Carbon-leakage league table Fertilizer/nitrogen compounds Lime Cement Coke oven products

92,4% 85,9% 59,2% 53,6%

The other 254 sectors were below 30%

Of all sectors analysed the fertilizer industry isBy theimposing most exposed. unreasonable benchmark levels DG CLIMA are threatening Europe’s selfreliance for food. The industry is very much in jeapordy in Europe. Signs of carbon-leakage are already visible.

Nitric -Acid As an industry we have acted responsibly and openly, providing all data requested by the commission in a fully transparent fashion.

Our figures are representative of the true picture of what is feasible for the whole European industry.

DG CLIMA are deviating from the “average best 10%” rule.

DG CLIMA are using unverified data from consultants to set benchmarks for the fertilizer industry. Thus deviating from “the average best 10%” rule.

The use of tertiary technology as a basis to set the benchmark is at best misleading. The emission reduction potential of this technology is not as positive as DG CLIMA suggests according to an independent report

by N.Serve.

In full accordance with the “average best 10%” rule as per the directive Fertilizers Europe have proposed a benchmark level of 1.24kg* for Nitric Acid plants. This represents a 75% emissions reduction for nitric-acid plants.

DG CLIMA calls for a BM level of 0.5kg* (90% reduction) based on the use of tertiary technology. DG CLIMA’s benchmark is technologically ambitious and is based on the projections of a sole supplier under optimum conditions. The true tertiary technology emission reduction potential based on the average of CDM/JI projects with tertiary technology fitted indicates a higher 1.23kg* possibility.

*N2O/tHNO3

This technology is also not ideally suited to around 66% of existing plants in Europe. *N2O/tHNO3

Nitric -Acid Costs.........

75% reduction in emissions from

Costs.........

90

nitric-acid plants as offered by the fertilizer industry would cost approx.

DG CLIMA’s demands for a % reduction, based on a benchmark level of 0.5kg, would result in a cost to the industry of

200million€ per year ...........

981million€ per year....... almost equivalent

this is representative of more than

15% of the industries annual profit and clearly shows that there are no possibility of industry windfall profits.

This reduction rate, based on the benchmark of 1.24kg is achievable by using a mix of technologies best suited to the individual infrastructure of plants.

The European fertilizer industry is willing to make such heavy investment to ensure its position as the global leader in energy efficiency.

to the industries annual profit. .

DG CLIMA’s benchmark is technologically over ambitious and is based on the projections of a sole supplier.

This benchmark level is unachievable and will result in the closure of plants and will ultimately lead to carbon leakage.

Ammonia As an industry, again, we have acted responsibly and openly, providing all data requested by the commission in a fully transparent fashion.

Our figures are representative of the true picture of what is feasible for the industry.

In full accordance with the “average best 10%” rule as per the directive Fertilizers Europe have proposed a benchmark level of 1,634t* for ammonia plants. This represents an 19.2% emissions reduction for ammonia plants. When considered that the production of ammonia is almost at the theoretical limit the reductions offered by the industry is exceptional.

It should be noted that with ammonia plants the scope for reduction is minimal. The characteristics of the production process is such that 66% of the CO2 produced come from feedstock. Only 33% derives from fuel.and therefore are controllable.

DG CLIMA and Fertilizers Europe have worked well to establish almost a workable benchmark.

All

European plants must, however, be included in the assessment of the “average best 10%” for the setting of benchmarks. To include only those who are our members and who already operate the most efficient plants will lead to a distortion of the benchmark figure set by DG CLIMA of 1,608t*.

The ammonia industry must also have financial compensation for the CO2 cost of electricity and CO2 in downstream products should be considered as ‘emitted.’.

Of controllable energy consumption the industry is offering to make reductions of *CO2 per t NH3

55%

*CO2 per t NH3

Ammonia Costs.........

Costs.........

At the level of benchmark proposed by Fertilizers Europe and in accordance with the “average best 10%” criterion the cost to the fertilizer industry would be.......

DG CLIMA have based there benchmark only on the plants belonging to fertilizers Europe.

Fertilizers Europe request that all plants are accounted for to enable a true calculation.

Benchmark level 1.634t*

Benchmark level 1,608t*

19.2

21.4% reduction

% reduction (55% on controllable

elements)

166€

million per year

185€

million per year.

It should be realised that the plants already operate at near the theoretical limits and that improvements will be costly. It will also see plants closing.

*CO2 per t NH3

*CO2 per t NH3

Carbonleakage Europe operates collectively the world’s most modern ammonia and nitric acid plants.

Based on unreasonable benchmarks as proposed by DG CLIMA and deviating from the “average best 10%” rule.

Nitric Acid Ammonia

Nitric Acid Ammonia

= 75% = 19.2%

Combined reduction of

48% possible.

For ammonia production, the energy efficiency of steam reforming plants means that their performance is close to the theoretical technological limit. Their CO2 emissions are therefore extremely low.

For nitric acid plants, modern N2O abatement technologies offer the potential for low levels of N2O emissions.

Based on sensible benchmarks as proposed

by Fertilizers Europe in accordance with the ““average best 10%” rule.

Ambitious but realistic reductions are possible albeit with some inefficient plants facing closure.

= 90% = 21.4%

A combined reduction of possible.

55% is NOT

The industry would not be able to cover the costs of such unreasonable benchmarks. plants would face closure....... jobs would be lost...... emissions would increase globally. with...

Europe’s self-reliance for food endangered.

A shift in production to Russia will result in an extra 37million tonnes of CO2/kg being pumped into the atmosphere. This is counter productive to the spirit of the ETS system.

Consequences of losing a vital industry The world will have 3 billion more mouths to feed by 2050.

Fertilizers provide the only means to keep pace with the global demand for food.

Without fertilizers…...... many will go hungry.

Without fertilizers…Europe will lose its self-sufficiency in food and be less able to contribute to world needs.

Natural gas is a fundamental raw material for modern fertilizer production.

Without affordable natural gas…European fertilizer costs will be prohibitively expensive and Europe’s food production will suffer.

12% of global greenhouse gas emissions come from changes in land use.

With more efficient use of existing land and greater crop yields, agriculture can minimise its effect on the environment.

Fertilizers play a key role in meeting the EU ’s ambitious targets for renewable energy.

Without them….. Europe will continue to rely heavily on fossil fuels, an unsustainable natural resource.

The European fertilizer industry is deemed to be the sector most exposed to ‘carbon leakage’.

Without a European fertilizer industry… production will move to less environmentally conscious regions with far greater carbon emissions.

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European Fertilizer Manufacturers Association 4 Avenue van Nieuwenhuyse 1160 Brussels

Fax: +32 2 675 39 61; Switchboard: +32 2 675 35 50 Email: mcr@efma.be