Isra-Mart srl : EU steels itself for carbon rules challenge

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Isra-mart srl news:
A legal challenge to draft EU rules for including steel plants in Europe's carbon emissions market is being planned by industry body Eurofer.
Eurofer claims the EU's proposals do not properly implement laws allowing the industry's most efficient 10% of factories to get free pollution permits after 2013.

The European Commission said it was confident of the methodology agreed last October, which followed two years of consultation with industry and EU member states.

The EU is aiming to cut CO2 emissions to 20% below 1990 levels by 2020, largely through an Emissions Trading Scheme (ETS), which forces companies to buy permits to pollute.

But some industries, including steel, have been given free permits to prevent their possible 'carbon leakage' or relocation abroad due to rising costs. This has often translated into large windfall profits for the companies involved.

Provisional EU data revealed last week that 10 of the biggest steel plants in the EU were given excess carbon permits worth almost one billion euros last year.

The environmental group Sandbag complained that the steel industry had banked 212 million carbon permits, worth €3.4 billion, within an ETS that had become dysfunctional.

The group claimed that steel giant ArcelorMittal was holding 44.6% of this surplus.

Emissions cap set too high

Carbon Trade Watch, which analysed the 77% of installations for which data was available, found that for the fifth time in six years, the ETS cap had been set too high.

Permit allocations had been 3.2% higher than the actual emissions measured from their relevant installations, the group said.

"Once again, the ETS has awarded massive subsidies to the steel sector and other energy-intensive industries," said Oscar Reyes, the group's spokesman. "Emissions trading is being used as an industrial subsidy for polluters."

The EU is acting to reverse this situation by 2013, when the 90% of plants which do not meet its new 'benchmarks' will have their free permits withdrawn.

But the steel industry says its installations recycle waste gases as an additional source of energy, and should be given credit for that in the benchmarking process.

Eurofer Director-General Gordon Moffat said the directive required best performers to receive free allowances to prevent carbon leakage.

"But since it is not being applied for the steel industry, resulting in billions of additional costs, we now have no other choice than to go to court," he added.

Eurofer believes that the new benchmarks will cost the industry about €5 billion between 2013-2020 on top of €18 billion from dispensing with the system of free permits.