CAGLIARI: EC COMMISSION'S PROPOSED CARBON TAX DISCRIMINATORY, UNWORKABLE

A carbon tax on fossil fuels, as proposed by the European Community Commission, would be discriminatory and unworkable, says Gabriele Cagliari, chairman of Italy's Ente Nazionale ldrocarburi SpA. The executive also outlined ENI's environmental programs and new initiatives. "Development is necessary for preserving the environment," Cagliari said. "Otherwise the environment would deteriorate, as the situation in eastern and Third World countries shows." Cagliari contends that only

Jan. 5, 1993

5 min read

A carbon tax on fossil fuels, as proposed by the European Community Commission, would be discriminatory and unworkable, says Gabriele Cagliari, chairman of Italy's Ente Nazionale ldrocarburi SpA.

The executive also outlined ENI's environmental programs and new initiatives.

"Development is necessary for preserving the environment," Cagliari said. "Otherwise the environment would deteriorate, as the situation in eastern and Third World countries shows."

Cagliari contends that only industrial enterprises have the know-how to meet the double aim of development and environmental protection.

CARBON TAX UNFAIR

"A carbon tax would have negative consequences," Cagliari said, referring to the EC commission proposal of a phased tax on fossil fuels that would climb to $10/bbl of oil equivalent by 2000 as a measure to reduce emissions of gases said to be linked to global warming from the greenhouse effect.

A carbon tax should be equally applied by all Organisation for Economic Cooperation and Development countries so as not to be discriminatory, he said. Even then, ENI would oppose it because such a tax "would go against the sense of responsibility shown by the industry at large and especially by the American industry."

Moreover, Cagliari cited an undisclosed "authoritative OPEC energy minister" who told him OPEC eventually would decide to offset the effects of such a tax with an increase in the price of oil.

Cagliari contends the taxes would benefit only industrializing Southeast Asian economies such as South Korea and Taiwan, which would gain further competitive advantage-in addition to low labor costs and limited environmental outlays-by not implementing similar taxes.

"It makes no sense to lower carbon dioxide only in a limited part of the planet," an ENI official said, citing highly polluting energy complexes in China that feature energy efficiencies of only half that of western power plants.

Cagliari is a member of the China Council, a group of 20 industrialists that advises the Chinese government on industrial strategies for environmentally safe development.

"If China were to reach our standard of living now, it would pollute alone as much as all the rest of the world" he said. Cagliari notes the Chinese hope eventually to attain western standards in environmental control, notably by improving energy efficiency.

Cagliari was part of the advisory business council to last summer's Earth Summit in Rio de Janeiro. That council, in a report to the summit, recommended a global approach to environmental conservation of sustainable development vs. the environmental extremist approach of zero development. The council also advocates a market based "polluter-pay" concept to controlling emissions and other pollution.

ENI INITIATIVES

ENI's spending on environmental research and development has jumped 40% in the past 3 years.

Environmental programs were to absorb 20% of ENI's R&D outlays in 1992. The programs paid off with a 10% reduction of ENI's air emissions in 1991 alone.

Cagliari said ENI's emphasis on natural gas supplies since the 1950s has led to Italy having the world's lowest per capita emissions of CO2.

He also cited ENI's lack of major oil or other spills and efforts at subsidiary Agip Petroli to expand production of gasoline oxygenate additives such as methyl tertiary butyl ether (MTBE).

ENI alone or in joint ventures produces 600,000 metric tons/year of MBTE in three plants in Italy, Saudi Arabia, and Venezuela. ENI also invested 4 billion lire ($2.84 million) in 1992 at its joint venture Ecofuel MTBE plant at Ravenna, Italy, on an experimental program to produce 10,000 metric tons of unleaded gasoline blended with ethyl tertiary butyl ether. The blend was to be tested in Italian vehicles last year.

Agip also is marking progress in developing technology to desulfurize heating grade gas oil, achieving a content of 0.1% vs. 0.4% under EC regulations.

In addition, the company is reducing the aromatic, paraffin, and benzene content of its gasoline. Agip is targeting a cut in gasoline benzene emissions to 1% from the current 2.5%, aiming ultimately for zero emissions.

ENI's chemical group spent 100 billion lire ($71 million) in 1991 to upgrade plants' environmental performance, notably for waste reduction, and for recycling plastics and acrylonitrile butadiene styrene resins.

At Gela in Sicily, Enichem produces 50,000 tons/year of biodegradable surfactants and recently joined a biodegradable surfactants joint venture with Slovnaft and Novaki in Czechoslovakia that is expected to generate $355 million/year in revenues.

Cagliari also cited ENI unit Saipem's offshore technology that helped the company play a major role in cleaning up two spills in the Mediterranean last year: a tetraethyl lead spill from the Yugoslavian Cavtat tanker and the Haven tanker oil spill.

Beginning this year, ENI will publish in its annual report a section dedicated to its environmental initiatives that will outline the group's emissions levels, energy consumption, and related costs and savings for each operating sector.

ENI also is considering opening a school of environmental studies in Italy in cooperation with the EC.