* EU steel body to challenge EU carbon market decision
* Eurofer says draft EU benchmarking rules unfair
By Pete Harrison
BRUSSELS, April 4 European Union steel industry
body Eurofer said on Monday it planned a legal challenge to
draft EU methodology for including steel plants in Europe's
carbon emissions market.
Eurofer says the European Commission's draft rules do not
properly implement laws that would allow the industry's most
efficient 10 percent of factories to get free pollution permits
after 2013. The draft rules were agreed in October.
The Commission said it was confident in its methodology,
which followed two years of consultation with the industry and
EU member governments.
The EU aims to cut carbon dioxide emissions to 20 percent
below 1990 levels over the next decade. Its main tool for doing
that is its Emissions Trading System (ETS), which forces
companies to buy permits for each tonne of carbon they emit.
But some industries, including steel, have been given free
permits to prevent their costs rising above those of overseas
rivals. That has often translated into large windfall profits
for the companies involved.
Provisional EU data revealed last week that 10 of the
biggest steel plants in the EU were given excess carbon permits
worth almost 1 billion euros ($1.42 billion) last year.
[ID:nLDE7301AF] Steel giant ArcelorMittal (ISPA.AS) was one of
the biggest beneficiaries.
From 2013, the EU aims to tighten up the ETS to eliminate
such windfall profits, and only the 10 percent most efficient
plants, which meet an efficiency "benchmark", will receive free
permits. It is these benchmarks that have caused the dispute.
The steel industry says its installations recycle waste
gases as an additional source of energy, and should be given
credit for that in the benchmarking process.
"The directive requires that best performers ... receive for
free all the allowances necessary to cover their emissions in
order to prevent de-localisation of emissions, production and
jobs to countries outside Europe," said Eurofer Director General
"That's the rule, but since it is not being applied for the
steel industry, resulting in billions of additional costs, we
now have no other choice than to go to court," he added.
The European Commission is expected formally to adopt the
draft benchmarking rules in mid-April, and Eurofer has
instructed its lawyers to seek an annulment at the EU's General
Court soon after that.
It says the problems it sees with the benchmarks will cost
the industry about 5 billion euros in the period 2013-2020, on
top of 18 billion euros from the move from a system of free
permits to one of benchmarking.
(Editing by Rex Merrifield)