Key Messages Moving Forward

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Evidence is mounting to support the need to better understand and manage carbon liability at a corporate level within the context of climate policy. It is becoming ever more critical for chemical companies to form a corporate position on key issues such as emissions trading, taxation, allocations and border tax adjustments, and to develop general strategies to maximize asset management under a global carbon trading framework.

This chapter examined the key vulnerabilities and opportunities of the chemical industry operating within a regulated environment on GHG emissions. It was revealed that a cap - and- trade can threaten the cost of production for basic and sub- sector products such as PVC, soda ash, calcium carbide, polyethylene, and polypropylene because of their high dependency on carbon intensive upstream inputs such as chlorine and olefins and especially for downstream products that are highly exposed to international trade. While climate policy can incur costs for industry, emissions trading and international offsets offer new revenue streams for the chemical industry which, for example, can deploy waste heat recovery or abate harmful emission from nitric or adipic acid production. Evidence also supports that a price of carbon drives innovation in the chemical industry to develop technology based solutions to climate change such as PV cells and lightweight composites.

The chemical industry must continue to advocate for the inclusion of sector and sub -sector consideration within a cap -and-trade to communicate the risks of products that face market distortion and leakage imposed through climate policy. Options discussed earlier such as benchmark based allocations, opt-in provisions, and international offsets offer a way forward for energy intensive sectors to remain competitive while achieving the overall goal of carbon reduction.

Long term strategies which evaluate the cost of abatement across facilities enable companies to maximize the advantages of emissions trading, particularly where international offsets are available from non-compliant facilities. In regions where biomass is available, further research in the areas of biomass-based routes for high value chemicals which incorporate CHP to maximize energy efficiency will deliver low carbon or carbon negative products to the market. An effective strategy will not only better position companies from climate policy risks but also enable a competitive advantage as more companies fall under compliance obligations. The chemical industry operates at the core of clean technology innovation and will continue to play an integral role towards achieving low carbon solutions in the fight against climate change.

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