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Steelmakers raise alarm on CO2 policy

Steelmakers raise alarm on CO2 policy

BRUSSELS, June 4 (Reuters) – European steelmakers raised the alarm anew on Wednesday over European Commission proposals to make electricity producers buy permits to emit greenhouse gases blamed for global warming.
The European Confederation of Iron and Steel Industries (Eurofer) said the plans, to be debated by EU environment ministers on Thursday, could cost the sector more than 50 billion euros ($78 billion) between 2013 and 2020 and put thousands of jobs at risk. The steelmakers have already demanded special treatment along with other energy-intensive industries that fear they will be put at a severe disadvantage in international competition if there is no global agreement to greenhouse gas emissions.
Gordan Moffatt, director-general of Eurofer, said the sector was particularly worried the proposed system would require steelmakers to buy CO2 emissions permits for electricity which it produced by recycling waste gases from blast furnaces.
“This would add a huge additional burden on us,” he told reporters on a conference call.
Moffat said the Commission’s plan to make power generators buy 100 percent of their emissions allowances at auction from 2013 would particularly raise costs for the most environmentally efficient electric arc furnaces that produce steel from scrap.
“If the power sector passes through 100 percent of the cost to end users, the cost to our sector will be huge,” he said.
Eurofer says the EU steel industry represents 200 million tonnes of annual output and 140 billion euros in turnover, with 370,000 staff and providing up to 1 million jobs including indirect employees.
EU diplomats said Germany, with the largest steel industry in the 27-nation bloc, was demanding that the Commission bring forward the date for defining which energy intensive industries require special treatment and how they can be helped.
The EU executive said it was aware of the concerns but first had to assess the risk to the steel sector from producers in countries with lower environmental standards, known as “carbon leakage”.
“The Commission will first assess whether steel is suffering from unfair competition and carbon leakage,” a spokeswoman for Environment Commissioner Stavros Dimas said.
“A report on that is due from the Commission by 2010 at the latest. Any issue would be taken account of in the degree to which steel makers must buy their permits through auctioning.”
Commission President Jose Manuel Barroso has raised the prospect of giving free permits to such industries, at least initially, unless there is an international agreement on curbing emissions at U.N.-sponsored talks next year.
 

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