Carbon leakage is a threat to Europe, says TK executive


The move towards pricing carbon dioxde emissions has caused concern that the competetiveness of the industrycould be reduced. These concerns have been further excacerbated by reports in the mainstream media that claim the industrywill profit fromthe ETS.

SBB 18 April So long as it is only in the EU that the steel industry needs to buy emission allowances, carbon leakage will remain an issue for the industry, Dr. Hans-Jörn Weddige of ThyssenKrupp told Steel Business Briefing’s recent Green Steel Strategies conference in Brussels.

The sector is expected to be 19.8% short of permits in phase 3, according to Eurofer, assuming the European Union continues to target a 20% cut in emissions by 2020, compared with 2005. It is a myth to view steel producers as having a huge allowance surplus from the 2008/9 crisis as quoted numbers often omit waste gas emissions and can be very misleading, he added. This assessment was supported by financial analysts at the conference.

Moreover, steel is essential for a CO2-lean European Union. The view that Europe needs to move from brown to green industries is also a myth: the issue is to promote a sustainable industry more generally, and for that steel is central. “It is the brown trunk that gives the green tree its competitive advantage,” Weddige commented.

He also argued against the view that technology options can “easily” save the day. They are still decades from commercial realisation. Governments need to provide a predictable, long-term framework for R&D and investment to speed up the process. Paying more for allowances will decrease the financial capacity for innovation of steel companies, Weddige pointed out.

The EU’s carbon market should focus on effectively allocating allowances – it should not be seen “as money making machines for speculators.” The “market needs time and stability” to work efficiently.

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