8% of ArcelorMittal’s Q4 EBITDA comes from carbon trading

In phase II (2008-2012) of the Emissions Trading System European steelmakers managed to secure free allocations of carbon credits. As steel production declined during the recession, so did their greenhouse gas emissions. Now, many steelmakers sell some carbon credits at the end of each year to boost their results.

SBB 14 February Global steelmaker ArcelorMittal earned $140m from trading carbon credits in the fourth quarter of 2010, its financial results show. This was 7.6% of its earnings before interest, taxation, depreciation and amortisation (EBITDA) for that quarter, Steel Business Briefing calculates.

The money will be reinvested in over 30 projects designed to reduce carbon dioxide emissions across ArcelorMittal’s Flat Carbon Europe division, the company tells SBB. These include the Ultra-Low Carbon Dioxide Steelmaking (ULCOS) pilot projects at Eissenhüttenstadt in Germany and Florange in France and the relining of blast furnace No.5 at Galati in Romania.

ArcelorMittal, and other steelmakers with production in Europe, currently receive free European Union Allowances (EUAs) under the EU Emissions Trading System. These are used to account for greenhouse gas emissions at the end of every year. One EUA counts for one tonne of CO2 equivalent.

Producers with reduced capacity utilisation often have credits left over each year. Many steelmakers sell some credits in Q4, when they can predict how many will be left over. Revenue from such sales adds to their annual financial results.

From 2013 onwards steelmakers will receive fewer free EUAs. Paris-based carbon analyst Orbeo predicts that EUAs could cost as much as €40/tonne ($54/t) by 2020, compared to €14.36/t currently. However, steelmakers will be able to use EUAs carried over from 2008-2012 to lower the costs and so do not sell all of their spare credits.


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