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UK to cash in on closed steel plant carbon permits

LONDON (Reuters) - Britain’s climate efforts were questioned on Wednesday after it said it would auction off rather than cancel millions of carbon permits to come from a closed steel plant, equal to one percent of UK greenhouse gas emissions.

The Corus steelworks at Redcar, Teesside, northern England is seen in this January 26, 2009 file photograph. Britain on Wednesday said it would auction off rather than cancel millions of carbon permits to come from a closed steel plant, equal to one percent of UK greenhouse gas emissions. REUTERS/Nigel Roddis/Files

The government said cancelling the European Union permits, allocated to a plant owned by Europe’s second largest steelmaker Corus in northeast England, would be a “lengthy process” so it would instead sell the annual rights to emit nearly 7 million tonnes of carbon dioxide back to industry.

“There’s a lot of paperwork around it, so the current intention is to auction them,” a UK Department of Energy and Climate Change (DECC) spokeswoman told Reuters.

DECC said that regardless of the closure, the UK was on track to meet its goal to cut emissions by 80 percent by 2050 and did not need to “change rules or cut corners”.

Environmental groups were outraged by the news.

“It’s not just hypocritical, it’s downright rude that for the sake of bureaucracy the UK can’t be bothered to cancel these permits,” said Sanjeev Kumar of green group WWF.

The Teesside plant is scheduled to be mothballed in late January and DECC said if the facility is to be closed for more than 50 days, Corus, owned by India’s Tata Steel, is not entitled to receive the permits, worth around 100 million euros ($147.5 million) per year at current market rates.

This comes as Prime Minister Gordon Brown prepares to push rich and poor nations next week to accept deep emissions cuts under a new climate deal at United Nations talks in Copenhagen.

“If the UK wants to show international leadership on climate change, that starts at home and this is the easiest first step,” Kumar added.

Under the EU’s Emissions Trading Scheme, the bloc’s flagship weapon in its fight again climate change, heavy polluters are given permits by government, most of which are free, and must submit one for every tonne of carbon dioxide emitted.

“Our national allocation plan, as approved by the European Commission, dictates that the credits go back into the auction pot when plant closures occur,” the DECC spokeswoman said.

“This is an EU-wide process and this is how we follow it.”

WWF’s Kumar said the process was not overly complicated and that several EU member states have already retired permits.


Britain’s 2008 greenhouse gas emissions were 623.8 million tonnes of carbon dioxide, according to provisional statistics published by DECC last March.

Even though the Teesside plant’s annual emissions were 6.2 million tonnes of CO2 between 2006-08, Corus was due to get 7 million free permits per year to 2012, Reuters data showed.

In cancelling Teesside’s permits, the UK could realise up to a one percent cut towards its 2050 emissions goal by ensuring these gases never hit the atmosphere.

But if auctioned, like the government’s special reserve of around 77 million permits due to be sold by 2011, the proceeds would go to Treasury coffers rather than being earmarked to fighting climate change or creating jobs.

Corus said on Friday 1,700 jobs will be cut at Teesside. No more steel will likely be produced after the firm failed to secure a long-term partner for the site’s output.

Corus said some operations will be maintained next year but a company spokesman could not confirm the carbon emissions of the remaining operations or how many permits, if any, the plant expected to receive in 2010.

Editing by Keiron Henderson