Exporting jobs......

Increasing greenhouse gas emissions.......

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

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

Most efficient producers globally.....

Offering almost 50% emissions reduction....

THE STORY.....in black and white.....

................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.

C

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/CO

2/kg would be

emitted.

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

75% reduction.

Almost double our

offer and almost 4 times the overall EU target.

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.

Of all sectors analysed the fertilizer industry is the most exposed.By imposing

unreasonable benchmark levels DG CLIMA are threatening Europe’s self-reliance for food. The industry is very much in jeapordy in Europe. Signs of carbon-leakage are already visible.

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 92,4%Lime 85,9%Cement 59,2%Coke oven products 53,6%

The other 254 sectors were below 30%

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.

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.

*N2O/tHNO

3

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.

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.

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

*N2O/tHNO

3

Nitric -Acid

Costs.........

75% reduction in emissions from nitric-acid plants as offered by the fertilizer industry would cost approx.

200million€ per year ........... 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.

Costs.........DG CLIMA’s demands for a 90% reduction,

based on a benchmark level of 0.5kg, would result in a cost to the industry of

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

Nitric -Acid

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 CO

2 produced come from

feedstock. Only 33% derives from fuel.and therefore are controllable.

Of controllable energy consumption the

industry is offering to make reductions of 55%

*CO2 per t NH3

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 CO

2 cost of electricity and CO

2

in downstream products should be considered as ‘emitted.’.

*CO2 per t NH3

Ammonia

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.......

Benchmark level 1.634t*

19.2% reduction (55% on controllable elements)

166€million per year

*CO2 per t NH3

Costs.........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 1,608t*

21.4% reduction

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

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

Nitric Acid = 75%Ammonia = 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 CO

2 emissions are therefore extremely

low.

For nitric acid plants, modern N2O

abatement technologies offer the potential for low levels of N

2O 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.

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

Nitric Acid = 90%Ammonia = 21.4%

A combined reduction of 55% is NOT possible.

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 CO

2/kg

being pumped into the atmosphere. This is counter productive to the spirit of the ETS system.

Consequences

Fertilizers provide the only means to keep pace with the

global demand for food.

Natural gas is a fundamentalraw material for modern

fertilizer production.

12% of global greenhouse gas emissions come from changes

in land use.

Fertilizers play a key role in meeting the EU ’s ambitious

targets for renewable energy.

The European fertilizer industry is deemed to be

the sector most exposed to ‘carbon leakage’.

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

The world will have 3 billion more mouths to feed by 2050.

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

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

With more efficient use of existing landand greater crop yields, agriculturecan minimise its effect on the environment.

Without them….. Europe will continueto rely heavily on fossil fuels, anunsustainable natural resource.

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

of losing a vital industry

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European Fertilizer Manufacturers Association4 Avenue van Nieuwenhuyse1160 BrusselsFax: +32 2 675 39 61; Switchboard: +32 2 675 35 50Email: mcr@efma.be