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VTT: Emission regulation in industrial sectors a start in reducing emissions in the developing countries



According to a survey conducted by VTT, the developing countries can contribute to global emission reductions by agreeing on industrial sectoral limitations. Their correctly planned sectoral commitments would also reduce the impact of the emission reductions of the industrialised countries on competitiveness. It is absolutely essential to have a Kyoto-type climate agreement limiting the carbon dioxide emissions of the whole economy, though it is a complex, administratively heavy system. This is one of the reasons why the developing countries find it difficult to commit themselves to emission reduction agreements.

According to the Intergovernmental Panel on Climate Change, all the industrialised countries must cut down their emissions considerably in order to keep climate warming in the range of two degrees. However, slowing down climate change requires global emission reductions in order to be sufficiently effective. The developing countries, too, must be able to control their growing emissions and finally bring them clearly below the present level. At worst, the emission limitations of the western countries promote the moving of industry to countries such as China and India for their lower production costs. This may increase total emissions, and the change will impair the competitiveness of the industrialised countries, a phenomenon called ‘carbon leakage’. VTT proposes industrial sectoral emission agreements as a way of solving these problems.

The strict emission requirements of the industrialised countries require the reduction of carbon dioxide emissions in all economic sectors. However, such a broad limitation would be extremely challenging to the developing countries. Setting their greenhouse gas emission limitations according to the industrial sectors would enable the developing countries to launch emission reductions faster and allow more fluent administrative monitoring and control.

The EU is currently unilaterally committed to reducing emissions. Other industrialised countries have not yet enacted their own emission trading schemes, though there have been votes taken about corresponding systems in the U.S. Senate, for example. Evolving countries, such as China and India, have been against binding emission reductions, even though the EU has tried to get them involved in the reduction scheme by suggesting benefits from selling emission allowances, technology transfer and training.

VTT’s survey presents industrial sectoral emission reduction methods, with special reference to the iron and steel industry. It is important to have a consistent approach, especially when many of the products are exported and their price is determined in the global market. Faced by this kind of competition, European manufacturers, for example, cannot add emission reduction costs to their product prices. An industrial sectoral approach is also useful in cases where production gives rise to a lot of emissions but there are fairly few production plants, or when the products are uniform and there are not many product types. It is also important that industrial representatives consider a sectoral approach possible.

Research report in the Web: Sectoral Approaches in the Case of the Iron and Steel Industry