Isra-Mart srl: Opponents of carbon rules hoard $5 billion in free credits

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SOME of Europe's largest industrial companies gained billions of euros from the carbon emission rules they lobbied fiercely against, analysis for the European Commission shows.

A report by the carbon trading think tank Sandbag reveals 10 steel and cement companies have amassed 240 million carbon pollution permits from generous allocations.

The free permits granted to the companies have a current market value of €4 billion ($5.38 billion) and can be sold or kept for future use. The commission estimates the energy-intensive sector will have stockpiled allowances valued at €7 billion to €12 billion by the end of next year.

''More and more businesses see that Europe's future lies in a highly efficient economy with low pollution,'' said Baroness Bryony Worthington, Sandbag's founding director. ''But a small group of carbon fat-cat companies are trying to stop this, in spite of making billions from a windfall of free pollution permits.''

The steel maker ArcelorMittal tops the list of companies in the report, with a surplus valued at €1.7 billion, followed by the cement giant Lafarge.

Tata Steel, third with a surplus valued at €393 million, last month cut 1500 jobs at two British plants, blaming emissions regulations and the economic downturn.

Tata Steel declined to comment.

The European Union emissions trading scheme puts a cap on the carbon pollution emitted by energy and industrial companies. Those reducing their emissions can sell their spare permits to those who do not. But a combination of initial over-allocation by governments and the economic decline has left the steel, cement, chemical, ceramic and paper sectors with many more permits than they need.

The industries have lobbied hard against calls from governments for the tightening of the scheme and other emissions targets.

In Britain, the government has proposed providing incentives for low-carbon innovation by setting a floor price for carbon from 2013. But this is opposed by the Confederation of British Industry, whose director-general, John Cridland, said last week: ''It risks tipping energy-intensive industries over the edge.''

However, independent analysis by Bloomberg New Energy Finance found that the carbon permits held by the steel industry would cover its emissions for the next 12 years.

The Sandbag report, based on public data, also found that nine of the 10 ''carbon fat cats'' it highlighted bought between them 24.4 million carbon permits from the cheaper international market, mainly from companies in China and India.

These can be used within the EU's trading scheme, enabling the companies to retain the more valuable EU scheme permits.