CO2 costs could keep EU mills from power generation

SBB 20 July 2010 Additional costs arising from buying carbon dioxide emissions permits in the coming years could dissuade European steelmakers from building waste gas power plants, some German industrialists claim.

The European Commission apparently plans to exclude some 25% of CO2 emissions generated from converting waste gases into power from receiving free emission allowances after 2013, according to Roderick Hömann, head of energy issues at German steel federation Wirtschaftsvereinigung Stahl. This is when phase three of the EU emissions trading system begins.

The extra costs for purchasing allowances from the national government or from the market would amount to some €200m annually, split among the six blast furnace operating sites in Germany, Hömann claims.

This would result in a paradox of environmental politics that would make steelmakers think twice about investing in waste gas power plants, warns Klaus Harste, chief executive of Germany’s Saarstahl.

Rogesa, the pig iron plant jointly owned by Saarstahl and Dillinger Hütte, has recently started test operations at a top gas recycling plant that would make Rogesa self-sufficient in power. But, under the new scenario, “an investment of €120m is threatened with becoming uneconomical during its construction phase,” Harste tells Steel Business Briefing.

The plant’s profitability would depend on the allowance price, and to break even it could easily take 15 to 20 years or longer, Harste says. “In that case, we might as well have continued bleeding the gas,” he comments.


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