EU 'fitness check' on refinery laws set for late 2014

Wed Nov 27, 2013 1:34pm EST

Related Topics

* EU refining industry contracting faster than demand

* Industry wants new rules postponed pending 'fitness check'

* Commission says laws can spur innovation, competitiveness

By Barbara Lewis

BRUSSELS, Nov 27 (Reuters) - The European Commission will unveil the results of a study of the EU laws governing refiners by September 2014, officials said on Wednesday, raising concerns it will be too late to prevent new legal burdens on the struggling industry.

As profit margins have shrunk, Europe's refineries have been closing units and shutting capacity faster than demand in the mature market has contracted. Official EU data showed refining activity in October fell to its lowest level in 25 years.

The industry has argued that EU environment and energy legislation have added to its problems.

In response, the EU executive Commission is undertaking an assessment, or "fitness check", of the relevant law to identify any unnecessary overlap, unintended consequences or unreasonable burdens. It is carrying out the same exercise for the aluminium sector.

Peter Eder from the Joint Research Centre, the Commission's scientific unit which is undertaking the study, told a Brussels forum the aim was to deliver conclusions by September next year and that it would take that amount of time to do the job well.

The industry welcomes the exercise but says it is taking too long, while the Commission is pushing out more legislative proposals that will affect it, such as an energy and environment package to be published in January.

"Either legislation should not be introduced, or they should do the fitness check quickly, and the Commission has said it can't," Chris Beddoes, director general, of European refinery industry association Europia, said.

Robin Nelson, science director at Concawe, which also represents the industry, said the Commission's approach of assessing the impact on every one of Europe's roughly 90 refineries could take three to four years, much longer than the Commission estimate.

Environmental campaigners have criticised the refining industry for seeking to dilute climate measures. The industry says it backs them as long as they are affordable.

Britain's refining industry association, for instance, has said research shows it needs to invest 11.4 billion pounds ($18.6 billion) between now and 2030 to comply with regulation.

Beddoes said the risk was that refineries would be unable to invest in anything else.

Europia is asking the Commission to shelter the industry from regulatory burdens by such measures as keeping it on a list of companies granted free carbon allowances under the European Union's Emissions Trading Scheme.

Another concern for the industry is the fuel quality directive, which seeks to label different fuels on the basis of how carbon-intensive they are.

The Commission has yet to announce its decision on the law after fierce lobbying from leading tar sands producer Canada and from refiners, which say it adds to costs.

Fabrizio Barbaso, deputy director general in the Commission's energy department, said compliance with EU law could have benefits as well as costs because it could spur innovation, improving competitiveness. ($1 = 0.6144 British pounds) (editing by Jane Baird)

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