Some of Europe’s top industrial firms that lobbied angrily against carbon emission rules after they were proposed are said to be making huge profits from allowances included in the legislation.
Analysis from think-tank Sandbag shows that the top ten steel and cement companies have gained a cache of around 240m pollution permits, amounting to around an accumulation of allowances worth Eu7bn-Eu12bn by the end of 2012.
Baroness Worthington, Sandbag’s founding director, said: “”More and more businesses see that Europe’s future lies in a highly efficient economy with low pollution.”
“[However], 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,” she added.
Tata Steel, a steel producer that recently announced the loss of 1,500 jobs at its sites in Lincolnshire and Teesside, is the third company on the list with a surplus valued at Eu393m. After blaming emission controls as one of the main reasons for the loss of the jobs, Tata declined to comment on the report released by Sandbag. The company with the largest surplus is the steelmaker ArcelorMittal – it has a surplus of Eu1.7bn.
The European Union emissions trading scheme places a cap on the carbon emissions of energy-intensive users. Those that reduce their emissions are able to sell their spare permits to those who are not able. But a combination of initial over-allocation by national governments and the economic decline has left the steel, cement, chemical, ceramic and paper sectors with many more permits than they need. The industries in question have lobbied aggressively against calls from governments (including the UK) for the tightening of the European Union emission trading scheme and other emissions targets.
Eurofer, a lobby group representing all of Europe’s steelmakers, said in a statement last month: “To remain competitive in the free, global steel markets, European steel needs … legislation that does not harm its competitiveness.”
In the UK, the government has proposed incentivising low-carbon innovation by setting a British floor price for carbon from 2013. However, this is opposed by the CBI. John Cridland, the director-general of the employers’ group, said: “It risks tipping energy-intensive industries over the edge.”
Not all companies are resisting the tightening of the trading scheme. Five major energy groups, including Britain’s Scottish and Southern Energy, last week called for spare permits to be withdrawn. This was supported by Sandbag. “Failure to do so could severely hamper business incentives to invest in low-carbon technologies, as the price signal will be skewed in favour of fossil-based solutions,” they said in a statement.