Industry warns against end of oil refining in Europe


The European oil industry rang the alarm yesterday (20 September) on the impact of EU energy efficiency legislation on oil refining activities, warning of the end of the sector in Europe.

Recent EU legislative proposals on energy efficiency pose "a substantial risk of leaving many regions and probably countries without indigenous refineries," warns a new report published by Europia, the European petroleum industry association.

This may be good news for environmentalists and local populations which are increasingly scared of potential health risks linked to having a refinery near home.

However, the loss of refineries could have serious consequences on employment, innovation and the security of supplies, according to Europia, which represents oil giants such as Total, Chevron, ENI, and ExxonMobil.

According to Europia figures, refineries employ in Europe around 600,000 people, and the sector supports the significant petrochemical industry, which employs in turn almost 800,000 people.

"The EU should thoroughly assess the risks associated with a disengagement of EU refining in Europe," warned Isabelle Muller, Europia's Secretary General.

Europia's position has hardened in recent months following the Commission proposal in June of a new directive on energy efficiency.

The legislative text suggests "recalibrating" the emissions trading system, possibly by making it binding by 2013 rather than 2020. This will inevitably increase costs on energy-intensive industries, including refining. Europia considers this move "a major competitive blow and disappointment to the refining sector."

Brussels has pushed in this direction because the target of reaching 20% energy savings by 2020 looks to be far from being fulfilled on time. It is indeed the only energy target that is likely not to be met among the three 20-20-20 objectives adopted by the EU in 2008 (see 'Background').

"Instead of changing consumers' behaviour, the EU legislator is attacking the production," said Muller, "but production is mobile," she added, underlining the risk that EU refineries could relocate in third countries. The loss of refineries would also imply the gradual disappearance of the petrochemical industry which is usually closely located to refining activities, goes on her reasoning.

The allies that Europia has found in the energy directorate-general of the European Commission were however not enough to win the internal battle over a more assertive anti-climate change policy.

In Brussels, indeed, the positions of those who play down the so called 'carbon leakage' threat seem to prevail, arguing that the EU economy will only be partially affected by the possible relocation of certain industries outside the EU. 

In December 2008, EU leaders agreed new legislation to reduce the EU's emissions of CO2 and other greenhouse gases by 20% by 2020, while boosting the bloc's share of renewable energy use to 20% over the same period. Energy efficiency is the other 20-20-20 target for the decade. 

But, unlike the other two goals, energy efficiency targets are not legally binding and in January, European Commission President José Manuel Barroso blamed this for the fact that it was the only goal not being met.

Commission documents forecast average energy savings of only around 10% by 2020, with the UK on track for 9% and even Germany only likely to hit 14%.

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