ArcelorMittal, the world’s largest steel producer – Britain’s richest man, Lakshmi Mittal, owns 43% of the company – may benefit from a £1 billion European carbon emissions trading scheme (ETS).
ArcelorMittal owns a 21% stake in Cliffs Natural Resources’ Empire Mine, located in Michigan’s Upper Peninsula, and a 62.3% share in Cliffs’ Hibbing Taconite facility. Cliffs’ has been taking some heat from Minnesota steelworkers for deals reached with ArcelorMittal that workers say are costing them their jobs. The company is expected to recall workers soon.
An investigation revealed that ArcelorMittal received far more emissions credits than it should have, partly due to ArcelorMittal’s lobbying efforts – performed by CEO Mittal – and cavalier threats – outlined in a January 2008 letter to the European Commission – to move all of their more than eighty European steel plants, at a cost of roughly 90,000 jobs.
As reported in the London Times Online:
Anna Pearson, an expert on the ETS who carried out the analysis, said: “Between 2008 and 2012 ArcelorMittal stands to gain assets worth £1 billion at today’s prices for scant effort. For them, the ETS has been turned into a system for generating free subsidies.”
“Following intense lobbying and claims that the scheme would harm business, the cap on emissions was set too high and too many permits were issued,” said Pearson, who performed her analysis for Sandbag, which campaigns to improve carbon trading.
Pearson estimates that by 2012 the company will have accumulated surplus permits for 80m tonnes of CO2 — equivalent to the pollution generated annually by the whole of Denmark.
Pearson said she had written to Mittal on behalf of Sandbag asking if ArcelorMittal would “retire” the carbon permits — meaning they could not be used by anyone else.
“If the company were to rip these up it would be a great act of philanthropy and set an excellent example,” she said.
An ArcelorMittal spokesman said: “ArcelorMittal’s surplus carbon credits are an asset which will only grow in importance,” he said.
Rio Tinto, seeking to open a metallic sulfide copper-nickel mine, in Michigan, and actively exploring in Minnesota, is also expected to be the recipient of a large, taxpayer-subsidized handout, similar to ArcelorMittal’s. Simply by virtue of being one of the country’s biggest polluters, Rio Tinto is expected to receive free carbon credits worth $462 million (Australian) in 2010, with the value expected to increase by 2015. Rio can sell the credits to other companies or use the credits to increase pollution at their Australian facilities.
For an excellent and humorous introduction to “carbon credits” and the pitfalls involved in their distribution and trade, watch the “The Story of Cap and Trade.”
LSMN
Eve Divine
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