I talked earlier about how the scheme could lead to an increase in steel being imported into Europe, quite probably from regions that aren’t exposed to a carbon tax, and produce steel in a far less efficient, more polluting manner than European steel companies, which are some of the most technologically advanced and efficient plants in the world. This is known as carbon leakage. So to avoid this we want to see all steel consumed in Europe exposed to the same carbon tax, irrespective of where it is produced, in order to ensure a level playing field and that European producers are not at a competitive disadvantage to global peers.
There are two final areas in which we are lobbying for change. First, the scheme doesn’t take into account our obligations to the power sector. Many of our European steel plants capture blast furnace waste greenhouse gases and transfer them to power stations, where they are used to create energy. Not only are we not rewarded for capturing and re-using the gases, but we are then also forced to hand over allowances, in proportion to the waste gases we capture, to the power station owners. This defies any common sense. Surely policy should be rewarding proactive measures to recycle and re-use emissions?
In the same vein, as you may know, ArcelorMittal is leading the way in exploring breakthrough technologies to capture waste gases and transform them into other products. We have a pilot project at our plant in Ghent, Belgium with a company called LanzaTech to capture carbon monoxide and convert it into bio-ethanol. Although these type of breakthrough carbon capture and re-use technologies are at an early stage, they offer hope for the steel industry, as we’re at the physical limits of what is possible in terms of reducing carbon emissions from steelmaking via the blast furnace route. But, amazingly, these types are projects aren’t recognised or rewarded in the ETS.
Getting changes to this policy is critically important, and if we can succeed in getting amendments in line with those I have outlined then it will make a vital difference to not just ArcelorMittal’s European business, but the entire European steel industry, and every person it employs.
We have, made progress, but nowhere near enough. Some EU member states have changed their position and suggest a reform of the ETS we can agree with. But the group of member states is not yet sufficient in size to have a majority. Also, the European Parliament has recently made a reform proposal that moves in the right direction. We really need to see more movement in the policy, and see it soon. This year is critical. Even though the changes to the ETS don’t come into effect until 2021, it is quite possible that the policy could be finalised, or at least have gone to a position where it will be incredibly difficult to change, before this year is out.
There is a very important vote which is scheduled for 15 February, when the European Parliament will review the Commission’s ETS proposal. Parliament has already made suggested amends to the Commission’s proposal, so their vote, while not 100% final and binding, as they then need to negotiate with the European Council before it becomes law, it a very important step. We need to find a way to effect change, now.