A regulation made by EU to avert climate change and ecologic problems, Green Deal will leave its mark on the next 30 years. And here are the projections of 0 carbon emission, avoiding source-oriented growth and regulations aiming to spread this transformation to the whole society, on the ceramic sector.
YASEMIN ERCETIN AKYAR
TSF Industry, energy and Standards Manager
With the European Green Deal announced in 11th December 2019, EU has published the first climate act of EU in EU Official Gazette in 9th July 2021, which constitutes the legal framework for the goal and goals of increasing the green gas emission reduction by %55 towards 2030 and turning Europe into the first climate-neutral continent of world until 2050.
European Commission has submitted its' FIT FOR 55 Package in 14th July 2021 to update its' climate and energy legislation in guide of the Green Gas Emission Reduction Goal which is "%55 until 2030". Qualified as the most comprehensive precautions submitted by EU against climate change, the package is called with the name 'Fit for 55' referring to the goal of leveling down carbon emission by 55 percent from 1990 level until 2030. EU has reached to 24 percent by 2019. The package in general contains the revision of EU Emission Trade system (ETS), Carbon Border Adjustment Mechanism (CBAM), Effort Share Regulations (including buildings and transportation), Renewable Energy, Energy Efficiency, Energy Taxation and Land Use and Social Funds.
Realizing the 2030 goal will require a systemic transformation in economy. Fit for 55 offerings reflects the actions to be taken in industry, transportation, buildings and energy intended for this goal.
The mechanism identified as Carbon Border Adjustment is intended for specific types of products which are produced without paying any cost for carbon emission, to be imported to EU through making a definite payment for carbon emission. This way, the goal is to bring a regulation and quotation for reducing carbon emission, protect the competitive capacity of EU companies which will have to abide these regulations against their competitors that do not pay a price for carbon emission and reduce carbon leakage.
For aluminum, cement, electricity, fertilizer and iron and steel products, Carbon Border Adjustment Mechanism will be brought in as of by 2026. In the transformation period (from 2023 to the end of 2025) product importers of the included industries will be obliged to report emissions without paying any tax. It will be put into practice as of by 2026. Ceramic sector is not included. It's foreseen for CBAM to be reviewed in 2025. Based on this review, Commission may expand CBAM'S scope to more sectors and/or indirect emissions as of by 2026. This means that at least some of the ceramic industry sectors may be included in CBAM system as of by 2026.
Turkish Ceramics Federation has conducted a study on the effects of EU Carbon Border Adjustment Mechanism on Ceramic Product Sectors. Calculated emission allocation cost rates are about 07 % of the sale price for CBA 50 Euro and Scope 1 emissions in Ceramic Tile Products and 4 % of the sale price for CBA 50 Euro and Scope 1 emissions in Ceramic Sanitary Ware. Costs arising from electricity consumption and additional costs in case of being included in the scope, are not involved in this calculation. This becomes more of an issue for foreign trade. It can be seen that this situation is the most significant risk in this market which makes the half of our export every year.
All these regulations will make some specific steps to be taken a necessity for establishing local mechanisms in Turkey in the near future intended for carbon pricing and thus for the Turkish industry to be affected by CBA to a bare minimum. In this respect, studies involving the Federation are being carried out by the regarding ministries. It's important to speed up the studies conducted in this regard.
One of the biggest cost items for the Turkish ceramic industry is natural gas. According to the scenario, it's set forth to reduce energy intensity in industry, putting energy efficiency practices and alternative fuel use into life.
The matter of transitioning energy consumption from natural gas to renewable energy is an issue that needs time and finance. It's important to increase incentives in investments that will be made during transition from natural gas to renewable energy sources. Ceramic industry has a firing technology almost at the same level with the European producers. They're even at a more advantageous state for they make productions at bigger capacities.
Projects to be realized for energy efficiency are limited to some extent. Companies have reached a level at this. It's a necessity to put radical r&d projects into life to reduce energy intensity. Like hybrid firing kilns for instance. Studies and works conducted in this matter are at r&d phase. But energy transition is a subject that needs big investments. It's important to benefit from green finance for a safe transition.
In order to strengthen carbon pricing's role in transportation sector, current EU Emission Trade System will be gradually expanded in a way to include marine sector as well. It's planning to gradually lift the free-of-charge emission allowances received currently by the aviation sector. There's a system established parallel to ETS for road transportation. A regulation is being planned in international haulage (logistics) for the emission arising as a result of the transportation by the road, air or marine transportation of products from Turkey to EU, to be added to the emission arising during the production process of that product. It's stated that a report will be submitted to EU Parliament before the end of Transition Period and offer an evaluation to expand CBAM's scope in a way to also include transportation services. Within the same article, it's also stated that the said evaluation report will also offer an evaluation intended to expand the CBAM scope in a way to include other goods and services within the value chain. It's seen that it will create big costs in logistic costs of ceramic products.
Emissions originating from other products and services in the supply chain of the sector are raw materials, midproducts and product suppliers and it will be beneficiary to include also the companies that does not directly export to EU but are suppliers of exporter companies, in order to designate reduction opportunities with lesser costs which can be jointly put into practice.
Ceramic sector's green gas emission rate is low compare to other sectors. European Ceramic Producers' rate is %10 among other sectors included in the Emission Trade System. But it makes lower than the 1% of total emissions. Although this rate is not known in Turkey it's esteemed to be less. We believe that ceramic sector needs to implement an emission reduction policy in a same quality with the implementation in EU.
In the event of emission trade system being activated in our country, it's important to be able to use the fairly collected capital in here to support the green transformation.
Another subject is the mobilization about Energy and Source Efficient Construction and Renovational Urban Transformation. With in mind that this subject is an opportunity for the building sector, as ceramic sector we are concentrating our r&d and innovation issues on energy efficiency.
There are some steps to be priorily taken for Turkish economy's climate consonant transformation. First of these is ratification of Paris Agreement in the Grand National Assembly of Turkey. This is done. At the same time, the official emission target delivered to UN in 2015, to be revised in a way to reflect Turkey's responsibility and determination. Taking these two steps will strengthen Turkey's hand in international negotiations. As a EU Candidate + Customs Union country, it's a requisite to dwell on benefitting from the funds with dunkirk spirit.
