EU green energy law added 47 euro cents a barrel to costs for Europe’s refineries, according to European Commission research made public this week.
Preliminary findings late last year had put the regulatory cost at 40 euro cents.
“The cost impact is visible. It’s significant, but there are other factors,” Ruslan Lukach, a scientific policy officer from the Joint Research Centre (JRC), the European Commission’s scientific unit, told a refining industry seminar.
A much greater game-changer for EU refineries has been the shale boom in the United States that started in 2008.
Between 2000 and 2012, the Commission has said EU energy costs rose roughly four-fold, compared with a doubling elsewhere in the world, where prices were held back by the rise in shale production.
Industry says the impact of regulatory costs in the European Union will become much more marked.
Gianni Murano, CEO of Esso Italiana, quoted findings from Concawe, a body set up by refiners to carry out research on environmental issues.
Between 2010 and 2020, it anticipates EU law will generate additional costs of $2.50 to $4 per barrel of oil processed, which could be the difference between a refinery continuing to operate and being forced to close, Murano said.
Some of that will come from the Emissions Trading System (ETS), the EU’s carbon emissions market.
Allowances that trade on the ETS, which price carbon at around 7.60 euros per tonne, are expected to strengthen as planned reforms are rolled out.
Lukach said between 2000 and 2012 the refining industry had been given more allowances than it needed.
The refining sector says it is vital to keep the sector in the EU to shore up security of supply, especially as it faces the prospect of increased dependency on imported products from Russia, the EU’s biggest energy supplier.
The JRC’s full refinery “fitness check” assessing the impact of relevant EU law will be officially published later this year.
Source: Reuters (Editing by Philip Blenkinsop and Jason Neely)