The new draft FAR reflects many of the demands of a handful of well-represented stakeholders, with incumbent emission-intensive industries already racking up several wins in their struggle to maintain a high level of free allocation for themselves. Regrettably, during the FAR revision process, the Commission not only failed to significantly reform several products’ benchmarks, but was also reluctant to fully implement the “one product =
one benchmark” principle. The claims of emission-intensive industrial sectors’ representatives were received and implemented throughout the proposal, allowing them to obtain less stringent definitions, to secure constant (or even higher) levels of free allocation and the exclusion of their carbon-free competitors from the scheme.
→ Cement benchmarks
- Cement benchmarks are still expressed in tonnes of (white and grey) clinker. However, the two benchmarks now also cover “alternative hydraulic binders”. This addition will allow some calcined clay to benefit from free allowances but only constitutes a very small improvement: most clinker alternatives and supplementary cementitious materials (SCMs) do not fall within the scope of the revision of the EU ETS (which, for instance, only covers cement production that involves rotary kilns) and will continue to be penalised by the free allowances distributed to clinker manufacturers. In other words, technological innovations that effectively lower the most polluting component of cement manufacturing will not be supported in this revision.
→ Steel benchmarks
- The steel sector is responsible for no less than a quarter of all the emissions covered by the EU ETS. Applying the “one product, one benchmark” principle to steelmaking could have dramatically helped to decarbonise the sector. However, here too, the Commission chose to continue allocating free allowances under different benchmarks.
- Most of the emissions associated with steelmaking result from the smelting process, which still benefits from its own dedicated benchmark despite being an intermediate manufacturing process. In the Commission’s draft, the “hot metal” benchmark now also covers direct-reduced iron (DRI) – which goes in the right direction. But crucially, by providing free allowances to specific intermediate manufacturing processes that all involve the transformation of virgin iron ore, the proposed revision of steel benchmarks will further penalise the circular reuse of scrap despite its huge potential to decarbonise the sector.
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