Poland’s steelmakers may face CO2 allowance deficit

SBB 22 April Poland’s steelmakers may be forced to buy extra carbon dioxide emissions allowances if the economic recovery continues and results in steelmakers increasing output, Poland’s Institute for Ferrous Metallurgy (IMZ) tells Steel Business Briefing.

Earlier this week, the European Commission approved the new quota for Poland’s CO2 allowances for 2008-2012, setting it at 208.5m tonnes/year. Wojciech Szulc, manager of IMZ’s business and process consulting division, argues this could prove too little.

“The Polish government wanted the level of emissions allowances to be higher by a third,” says Szulc. “The Polish side reasoned that this would be the requirement for Polish firms, and at a lower level of emissions limits they would be forced to buy extra allowances…which would cause an increase in production costs,” he continues.

If the economic recovery strengthens, demand for emissions units is expected to intensify, meaning that allowances would increase in cost and could cause Polish steelmakers to become less competitive.

“If a drop in steel production occurs, then there will not be a larger problem, because the number of allocated limits would be enough,” says Szulc. “However, if the steel industry comes out of the crisis, we may find that steelmakers are forced to buy extra CO2 allowances in order to function normally,” he adds.

Another Polish steel industry source argues the picture is not so black and white. “If more electric arc furnace-based production occurs, then the structure of CO2 emissions will change,” he tells SBB. “Blast furnaces emit 5-6 times more than EAFs,” he adds.


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