Europe’s energy intensive industries continue to complain about the future cost of carbon credits. Issues of cost and the effectiveness of current regulation is legitimate. A life cycle approach to emissions is still not part of European policy and sometimes costs can lead to less investment in new, cleaner technologies. But ultimately the effect of the weak economy will have a far greater effect on invesment in European industry.
SBB 20 April Europe’s approach to reducing steelmakers’ carbon emissions presents “a heavy burden to the competitiveness of the industry” that ultimately restrains investment in new facilities and technologies aimed at achieving the same goal, according to German Steel Federation president Hans Jurgen Kerkhoff.
Kerkhoff, speaking at Platts SBB’s third annual Green Steel Strategies conference in Berlin, said while the European Union’s carbon reduction targets are ambitious, their impact is lessened as other regions around the world have not committed similarly to the effort. And the cost of such measures – which will total billions of euros annually – take funding away from important technological advances that many producers already are undertaking.
The German steel industry on its own realized a 2.4% year-on-year reduction in carbon emissions in 2011, but a steel life-cycle assessment approach should be the focus of emissions initiatives going forward, he said.
“Instead of regulatory investments, we should give more priority to technological developments,” Kerkhoff said, adding that his organization is “in constant political discussions in Berlin, as well as Brussels,” home of the EU. “Climate protection begins with steel,” Kerkhoff said. “Steel is the basis of sustainable value creation. A sustainable economy can only grow up with and out of industry.”
Echoing Kerkhoff’s sentiments, Danny Croon, environment director for Eurofer, said in a separate presentation that the industry views Europe’s carbon measures as “unilateral and disproportionate” to other regions of the world.
The proposed benchmarks for industrial greenhouse gas emissions are no expected to be confirmed by the European parliament later this year. Eurofer still believes that they have been set too low and estimate that the European steel industry could face additional costs of some €1.5-3bn per year. According to SBB‘s broad estimates this could add some 2.5-5% to average European integrated steelmaking costs. However, the most efficient plant in Europe is more likely to see an increase of under 0.5%.
SBB 20 December 2010 The greenhouse gas (GHG) benchmarks for the European steel sector were approved last week after the German environment ministry abandoned its opposition, Steel Business Briefing understands.
The German environment ministry had opposed the benchmarks, presumably as they were too low, and had the power of veto. However, it changed its position to vote in favour at the last minute. The ministry simply “didn’t feel much support” for its view from other governments and decided to compromise, it tells SBB. It described the final decision as well balanced.
The benchmarks will be used to determine the volume of free emission allowances given to the steel industry in phase III (2013-2020) of the European Emissions Trading System (ETS). Polluters which have insufficient allocations to cover their emissions will have to buy in more permits.
Indeed, the agreed benchmarks are still ‘far below where they need to be’, Eurofer’s Axel Eggert tells SBB. They supposedly represent the average of the 10% most efficient plants in terms of GHG emissions, but the benchmark for blast furnaces is still some 7% below the most efficient in Europe, Eurofer suggests.
The result will lead to significant added costs for steel companies in Europe “compared to steel companies that produce steel in regions which do not have similar CO2 costs’, warns ArcelorMittal in a statement sent to SBB.
Steel producers talk about “fair” implementation – it has to be presumed that this is fair from their point of view. All well and good, but there is also the need to look at fairness from a wider point of view. What this should be, of course, is totally opaque.
SBB 2 July 2010 European steel producers association, Eurofer, has reiterated to Steel Business Briefing its concerns over the supply of European Union Allocations (EUAs) in phase III (2012-2020) of the European Emissions Trading System (ETS).
The European Commission missed a deadline on 30 June to publish the total number of EUAs to be made available in phase III. When questioned, EC spokesman, Lena de Visscher, told SBB the announcement would now be made “in the next few days”.
“The volume of EUAs available in 2013 will be much below the average of the second trading period [2008-2012],” warns Eurofer spokesman, Axel Eggert. According to the EC directive the total number of EUAs will decrease at a constant rate from 2013 but, because the decrease is to be measured from the ‘mid-point’ of phase II, a sharper decline will be seen in 2013.
Although the general model for phase III allocations has been set out, details are thin on the ground. The system could be either too lenient to be effective in cutting emissions, or so strict that it becomes punitive for steel producers. “The provisions of the directive must therefore be implemented in a way that a fair quantity is available and not reduced to the lowest possible level”, Eggert adds.
The method of auctioning EUAs in phase III will be voted on by the EU climate change committee on 14 July, SBB notes.