Posts Tagged ‘carbon credits’

China becomes world’s largest steel beneficiary of Kyoto

The UN Clean Development Mechanism has previously been heavily criticised for the slow pace of processing of projects. However, since late 2010 it has significantly increased the rate of project registration and carbon credit issuance. Since this report was first filed its has issued a further 1,019,113 credits to Chinese steelmakers and 74,068 to Indian steelmakers.

SBB 10 January 2011 The Chinese steel industry has received the most Certified Emissions Reductions (CERs) of any national steel industry worldwide after recently overtaking India, Steel Business Briefing analysis demonstrates. Chinese steelmakers, Handan Iron & Steel, Jinan Iron & Steel, Lianyuan Iron & Steel and Ma Steel, have all received allocations of Certified Emissions Reductions (CERs) over the last three weeks.

CERs are carbon credits granted to projects that reduce greenhouse gas emissions as part of the UN’s Clean Development Mechanism (CDM). These can then be sold to companies which can use them under cap and trade schemes or traded on exchanges. The steel industry worldwide has the potential to generate up to 17,199,051 CERs per year with a current market value of some $258.1m.

Since the beginning of the CDM Chinese steelmakers have been allocated a total of 11,228,597 CERs, compared to the Indian steel industry’s 9,164,351 CERs. Although the Indian industry has 45 registered projects compared to China’s 29, the Chinese projects tend to be larger, blast furnace-based projects and so have the potential to earn more credits.

Jinan Iron & Steel remains by far the largest Chinese beneficiary with 4,326,274 CERs issued, although India’s JSW has received the most credits worldwide with 7,347,168 CERs.

The Carbon Markets & Investors Association recently commended the CDM’s Executive Board for improving the efficiency of project registration and issuance of credits over the last few months. However, it also stated that waiting times are still double what they should be.


ArcelorMittal’s charcoal production in Brazil to double

SBB 19 August 2010 ArcelorMittal BioEnergia, which manages the company’s eucalyptus plantations and charcoal manufacture in Brazil, is looking to more than double production in the next five years, according to Elesier Gonçalves, its chief executive. Charcoal output is expected to rise from 2.4m cubic metres this year to rise to 5.2m cubic metres in 2015, he tells Steel Business Briefing .

The eucalyptus forests and kilns are mostly in Minas Gerais state. At present they supply the charcoal, or “bio-reductant,” to two small blast furnaces at Juiz de Fora, a longs plant, and to one of the two blast furnaces at Timoteo, which produces stainless/special steels.

In addition, the EAF at ArcelorMittal Cariacica in Espirito Santo state takes in scrap, and pig iron feed; the latter is supplied by independent producers with their own BFs, but using ArcelorMittal charcoal.

From 2011, the second blast furnace at Timoteo is also expected to use charcoal. And there are suggestions that one or two new BFs to be built at Juiz de Fora will also use charcoal.

The cost of charcoal is around a third of that of coke, SBB understands. The substitution of coke by charcoal can also earn a company carbon credits.

The main issues in the use of charcoal are density, the presence of fines and moisture, company executives say. ArcelorMittal BioEnergia is now taking steps to resolve these. Thus the density of its charcoal is planned to rise from 230 kg/m3 to 260 kg/m3 over the next five years, Gonçalves says.

Would ‘carbon duties’ on steel imports be a good way to go?

SBB’s 4 March article on carbon duties made me think. Putting carbon duties on steel imports would encourage both exporters to the European Union as well as importers to face the reality of moving to a low carbon economy. The article is below.

It might well provide extra protection for steel producers, which may not be so good, if they themselves are already responding positively to the situation, for example by being more efficient in their production processes or using more scrap. In the same vein, it might help discourage carbon leakage, which does not seem to do anyone any good.
But perhaps most importantly, it would signal to steel producers and traders elsewhere in the world that something needs to be done to reduce carbon. Steel as one of the orginal industries of the industrial revolution needs to show the way. Its technology has hardly changed since the 1700s.

SBB 4 March:  In the medium term, Europe’s steel importers may have to pay carbon duties on their imports, suggests a UK Carbon Trust report due out today. In the interim, Europe’s integrated steel producers should benefit from free CO2 allocations. The recommendations relate to the possibility of carbon leakage in phase 3 of the EU’s Emission’s Trading Scheme, starting in 2013.

Border levelling, as proposed in the report, involves adjusting prices at the border to compensate for carbon costs, allowing EU imports and exports to trade competitively. However certain types of adjustments, such as import duties, may not be WTO compatible.

Thus the report suggests that EU steel importers could be required to “buy and surrender allowances or credits.” This could be done on a flat rate of carbon per tonne of steel, thus equalizing costs/prices approximately with those of domestic producers. This would be WTO compatible, Steel Business Briefing understands from the report. Another possible adjustment would be to require exporters to the EU to buy carbon credits to raise their carbon costs to EU levels.

On exports, the report says reimbursement of the higher costs would raise legal issues. It suggests that these can be largely resolved by bilateral negotiations.

Eurofer did not comment directly on the report. It has noted previously that if there is no international agreement on emissions it would accept free allowances “based on achievable benchmarks that provide 100% of the needs of the best performing European steel installations.” It also says border adjustments need to be may be applied in addition.

 Roger Manser – News – Business News – Corus in £250m carbon credits wrangle – News – Business News – Corus in £250m carbon credits wrangle.

The closure of Corus’ Teesside Cast Products (TCP) in the UK – whether temporary or permanent, we will have to wait and see – has highlighted the value of carbon dioxide permits/credits to the European Union steel industry. SBB estimates their total current value/cost to the European steel industry at very approximately€5bn/year, depending on price etc, but the real numbers are very hard to calculate.

The UK’s Community Union, which has members at the steel plant, is calling on the UK Environment Agency to hold in trust the carbon credits for TCP, until such a time as steel making is resumed.  The mothballing of the 3 million  tonnes/year slab making plant has led to fears that Tata Corus will seek to sell carbon credits freely allocated to the plant.

The £250m calculation is for carbon credits over three years – 2010, 2011, and 2012. It is a gross exaggeration, as no-one knows what will happen in 2011 and 2012 – the plant may well re-open. A more reasonable estimate  – by SBB – for 2010 is a few tens of milions of euros.

Roger Manser