Steelmakers hold millions of EU pollution permits

• Steel industry main beneficiary of European emissions trading• Three Mittal plants hold 15% of surplus permits, study reveals
Terry Macalister
guardian.co.uk, Wednesday 9 September 2009 18.30 BST
Steelmakers such as ArcelorMittal have become huge beneficiaries of the European Union's emissions trading scheme, making tens of millions of pounds out of free carbon permits, research shows.
Just three plants in Belgium, Spain and Romania, all controlled by Lakshmi Mittal, Britain's richest man, are sitting on 15% of the surplus permits handed out by the EU, according to official figures obtained by the Sandbag environmental campaign group.
"The scale of the benefits enjoyed by the steel industry make it look like the ETS is being used as a hidden subsidy to the sector," said Bryony Worthington, the founder of Sandbag.
The price of carbon has plunged over the last 12 months, partly because the slowdown has reduced output and emissions, but also because the EU handed out too many free permits to industry.
The ETS allocates certain companies allowances for the carbon they emit, and is supposed to force them to buy additional permits to pollute if they do not cut their emissions. Most of the heaviest polluters and users of carbon permits are power companies such as Drax, which runs the coal-fired facility in north Yorkshire of the same name, and Elektrownia Belchatow of Poland.
But Worthington said the EU statistics showed steel plants such as Germany's Integriertes Huttenwerk Duisburg was sitting on 10.8m permits, Glocke Salzgitter 5.1m and Belgium's ArcelorMittal Gent 4.3m. She feared this demonstrated steel companies were masters of lobbying the EU to ensure they benefited at a time when permits can be traded at €15 (per tonne).
ArcelorMittal admitted that it remained in dialogue with policymakers about the future shape of the trading scheme on the basis that it could raise the cost of production in Europe and therefore represent a "threat" to outside competitors.
The steel group denied it was exploiting the ETS and was not prepared to confirm or deny that it was holding any particular number of surplus permits.