October 13, 2008

EU steel industry warns Brussels on climate plan

Reuters reported that Europe's steelmakers have warned the European Commission recently that production and jobs would move abroad to less environmentally demanding locations if Brussels did not amend radical plans to fight climate change.

Mr Philippe Varin president of the European Confederation of Iron and Steel Industries said proposals to curb greenhouse gas emissions due out on Wednesday would put his industry at a big competitive disadvantage compared to Chinese, Russian and US rivals.

He said that "We have very strong concerns that if the proposal is not properly drafted, it could have a very damaging impact on our industry. He added that if we were to relocate our industries outside Europe, we would then have to transport steel to Europe, adding emissions. We would have taken industry outside Europe and we would be emitting more than before."

Mr Varin said the Commission should promise free permits to emit CO2, the main gas blamed for global warming, until such time as an international agreement was in place to either curb global emissions or cover all major steel-producing nations.

Mr Varin said that steel makers faced a threat to profitability if they had to buy permits at auction, while non European rivals did not and also incurred higher electricity prices as the power sector passed on its own CO2 auction costs to consumers. He said European steel was already among world leaders in CO2 per tonne, having reduced emission by 60% since 1975 and 21% since 1990, the reference year in the Kyoto protocol on climate change.

Mr Gordon Moffat Director General of Eurofer said that the latest draft of the Commission directive did not contain a clear definition of energy intensive industries or gives any commitment on what measures would be taken to protect them if there was no international agreement on climate change. He said phasing in auctioning for the steel industry could remove any incentive for steelmakers in China, India, Russia and the United States to reach an international sector wide agreement on curbing emissions, since the others would know their European competitors would be handicapped anyway.