ArcelorMittal successfully lobbied the European Commission to avoid paying for permits under the Emissions Trading Scheme (ETS). The steel giant claimed that this would push the steel industry out of Europe, causing massive job losses. At the same time, ArcelorMittal is sitting on potentially huge profits because it can sell its extra permits, having received far more than it required.
ArcelorMittal is the world’s largest private steel company and makes 10 per cent of the world’s steel. It is also one of Europe’s bigger CO2 polluters. Yet ArcelorMittal fought EU requirements under the Emissions Trading Scheme (ETS - the world’s largest carbon market), lobbying to secure free permits to pollute, allowing it to continue with business as usual, with permits to spare.
The steel giant, whose chief executive is Lakshmi Mittal, Britain’s richest man, lobbied the EU Commission and member state governments opposing the proposal for auctioning of permits (as opposed to the free supply which the steel industry and others have now successfully lobbied for). Directors of Arcelor Mittal Bremen claimed to the European Commssioner in 2008 that the steel industry would be compelled to move steel production out of Europe.
After the blatant over allocation of permits for the manufacturing sectors in phase I and II, the proposals for phase III (2013-2020) envisioned auctioning permits. Now ArcelorMittal and industry body Eurofer have persuaded the EU Commission to continue subsidising Europe’s worst polluters who will continue to get free permits until 2020 at least
ArcelorMittal opposed EU proposals to increase CO2 cuts from 20 to 30 per cent. It argued that the EU should not take unilateral steps, and the American Iron and Steel Institute, where ArcelorMittal is a member, made the same case to block action in the US under the Clean Air Act.
The company also tried to challenge the rules governing the ETS in the European Court and claim financial damages, but its claim was rejected.
The world’s biggest steel producer has profited nicely from its lobbying efforts. In 2008-2009 it held more than 50 million surplus EU allowances which it received free of charge - all of which it can sell to other companies or bank for future use. Described as the ‘number one carbon fat cat’, ArcelorMittal has the potential to make over €1 billion profits from the scheme by 2012.
ArcelorMittal would be able to use its phase II surplus of over 100 million permits and not only avoid emission cuts but increase its emissions (1.8% a year during Phase III).
A study from CE Delft found that steel manufacturers have been able to pass through the prices of their freely obtained allowances. Industry disputes the study’s results.