Cap- and- trade emissions plan opposed
THE international steel industry has set its face against the kind of economy- wide, cap- andtrade emissions scheme being proposed for introduction in Australia, saying it produces perverse outcomes.
The industry’s global lobby group, the International Iron & Steel Institute, which represents 150 companies in 52 countries accounting for 70 per cent of world steel production, has called on governments to develop a global system of sectorspecific abatement agreements that will enable all the major global steel- producing countries to phase out obsolete technologies.
The scheme, it says, should be global, voluntary, technology- focused and based on energy intensity.
It argues that this form of abatement management can set moving benchmarks for greenhouse gas emissions for different industries for an agreed assessment period, taking into account the type of products produced and the processes used, then reward companies that beat the average for their sector and punish those that fall behind.
The industry says the form of economy- wide emissions trading scheme embraced in the European Union means that companies that have been less energy- efficient in their sector receive more credits than the most efficient, while companies setting out to build global market share by expanding efficient production are penalised by being forced to buy extra credits. Meanwhile inefficient companies can compensate for their inability to grow their market share by selling unused allowances.
Steelmakers account for up to 6 per cent of manmade carbon dioxide emissions globally and are engaged in fierce competition with the aluminium industry for market share.
‘‘ The reality,’’ says IISI secretary- general Ian Christmas,’’ is that aluminium requires 10 times as much energy to provide metal as steel. In terms of climate change, it is a disastrous metal.’’
He has warned governments in Europe and Japan that the current vogue for cap- and- trade emissions systems will give a fundamental advantage to steelmakers in Russia, China and other countries not embracing such schemes. European operators of steel blast furnaces will be handicapped in such competition to the extent of $ US135 a tonne, he says, and will quickly relocate to parts of the world where they are not disadvantaged.
A scheme that merely shifts manufacturingrelated greenhouse gas emissions to other parts of the world with less stringent controls will fail to adequately address the global warming issue, he argues.
IISI offers governments the prospect that the steel industry, if offered the opportunity of a sector specific benchmarking scheme, will voluntarily initiate ‘‘ radical new technology solutions’’ to greenhouse gas emissions and embrace effective reporting procedures on a common global basis.