Cap- and- trade emis­sions plan op­posed

The Weekend Australian - Review - - Steel Special Report - Keith Orchi­son

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.

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