The leaked proposed benchmarks, presumably from the Commission, are so far below the industry’s estimated figures that it is hard to know if they are genuine. Until an official draft is unveiled, it has to be assumed that the Commission is whistling in the dark.
SBB 8 October 2010 Draft proposals for benchmarks to determine the free allocations of carbon credits to steelmakers in 2013-2020 have been leaked, and are much lower than steelmakers had expected, Steel Business Briefing understands. Steel plants must otherwise account for their emissions using European Union Allocations (EUAs).
The hot metal benchmark, which covers the blast furnace, basic oxygen furnace and casting, is almost 30% less than independent estimates based on Eurofer data. If this benchmark figure is maintained, integrated steel makers would have to purchase significantly more EUAs than they had expected.
One variable is how to account for generating electricity from waste-gases. Eurofer argues that 100% of CO2 in the waste-gases should be included in the benchmark, but the actual percentage is still uncertain.
Eurofer also says the European Commission (EC) uses unverifiable literature-based data.
Connie Hedegaard, commissioner for climate action, has argued that the steel industry has profited from the emission trading scheme up to now. A large number of EUAs have been held over from when steelmakers cut production in 2008-2009, though Eurofer points out that this is true of all industries.
However, a Eurofer spokesman tells SBB it may well be illegal to take this into account when determining benchmarks. The Commission insists the benchmark will be set according to consistent methodologies. The process is a ‘harmonised reallocation exercise’ based on fairness as well as technical elements, EC spokesperson Maria Kokkonen commented to SBB.
Draft proposals for industry benchmarks
Tonnes of CO2 equivalent per tonne of product
Hot metal – 1.065
EAF – carbon steel 0.285
EAF – high alloy steel 0.357
Iron casting 0.325