EU court backs carbon-trading system

Bloomberg News
Published: December 16, 2008

LUXEMBOURG: ArcelorMittal and other steel makers are not discriminated against under European Union air-pollution rules that exempt industries with similar greenhouse-gas emissions, the European Union's highest court said Tuesday.
ArcelorMittal, the world's biggest steel maker, asserts that EU lawmakers unfairly excluded the aluminum and chemical industries from 2003 legislation that capped emissions of carbon dioxide in line with the Kyoto Protocol, the international global-warming treaty. That exclusion put ArcelorMittal and other steel makers, which are included in the system, at a "complete disadvantage," lawyers for the company had told the European Court of Justice.
Alongside the steel industry, the current system includes electricity, paper and cement. But the court ruled that limiting the scope during the initial stage of the carbon trading system "may be regarded as justified."
"In view of the novelty and complexity" of the system, the EU "could lawfully make a step-by-step approach for the introduction of the allowance trading" system, the court ruled.
The court's decision eliminates concern that the European Union may need to rewrite the rules of its greenhouse gas trading market, the world's largest. Governments, including in the United States, are scrutinizing the program as they consider their own policies to help protect the climate.

The European emissions-trading system, started in 2005, requires companies that exceed their quotas for CO2 to buy permits from businesses that emit less.
ArcelorMittal, which is based in Luxembourg, had no immediate comment.
But Gordon Moffat, director general of the European Confederation of Iron and Steel Industries, said his group was disappointed by the ruling.
"This legislation is discriminatory in our view," he said.
ArcelorMittal had argued that the legislation establishing the EU emissions-trading system should not have differentiated between steel, aluminum and chemical industries, which all emit CO2.
Lawyers for the EU and the French government had argued that including other industries at the start would have complicated the system and harmed its effectiveness.
The court ruled that the European Union avoided difficulties by excluding the chemical industry, which "has an especially large number of installations, of the order of 34,000." Including it would have "increased the administrative burden" of managing the new system, it said.
The European Commission, the executive arm of the European Union, in January proposed adding the aluminum and chemicals industries to the system starting in 2013 as part of a tightening of the regulations.
The case may affect a separate case ArcelorMittal filed at a lower EU court seeking to partly annul the legislation and receive damages. The European Court of First Instance, the second-highest EU court, at a hearing in April said it would wait for a decision in this case before giving its own ruling.Arcelor and KDI are fined
Separately, ArcelorMittal, Klockner Distribution Industrielle and eight other steel companies were fined a record €575.4 million, or $791.2 million, by the French antitrust regulator for price fixing, Bloomberg News reported from Paris.
Three ArcelorMittal units were fined a total of €302 million and KDI was fined €169 million, the Conseil de la Concurrence said. The fine was the highest ever by the regulator.
Clients, which were primarily builders and small and mid-sized companies whose scale prevented them from negotiating better prices, alerted the French Finance Ministry after noticing "suspicious similarities" in the prices they were being quoted, the Conseil said.