Companies across Europe are hoarding permits to produce greenhouse
gas emissions worth hundreds of millions of pounds, the Guardian can
reveal.
The surplus credits have been amassed from over-allocation of permits to pollute from the European emissions trading
scheme, and by buying cheap credits from carbon-cutting projects in
developing countries and holding on to their more expensive official EU
allowances.
The saved permits can be used to meet future targets to cut the greenhouse gas emissions blamed for global warming and climate change without actually reducing pollution, or sold for a profit in the future.
Campaigners
for tougher emissions reductions said the saved-up allowances
discredited the argument of some industries that much deeper cuts in
future would be "fatal" because they could no longer afford to compete
against rivals outside the EU.
However, companies involved said
the banked credits would help them pay to develop new emission-cutting
technology, and to meet emissions targets until that became widely
available.
Industry also warned it faced "death by a thousand
cuts" as a result of the next phase of the scheme, from 2013 and 2020,
and other costly environmental legislation planned by government.
Business leaders accused the government of being prepared to sacrifice
industry to enable other sectors such as aviation to keep polluting and
meet the UK's carbon budgets.
One steelmaker told the Guardian:
"Officials see us as acceptable collateral in the fight against climate
change. If we don't make anything in this country any more, it means
people could still fly to Tenerife once a year and the UK will keep
within the carbon budget."
He said meeting targets would require
vast amounts of steel to build windfarms, nuclear reactors and electric
cars. This would have to be imported from more-polluting steelmakers
outside Europe if the industry disappeared in the UK.
The
Emissions Trading Scheme (ETS), the centrepiece of the EU's pledge to
cut greenhouse gases, has already been criticised for giving many
companies allowances to emit more emissions than they need, leaving
little incentive to reduce pollution, and for lax regulation.
The
latest concern about "banking" credits involves companies also buying
cheap allowances from "offset" schemes which reduce emissions in other
countries, often China and India, and using these to cover their
emissions while keeping their official allowances – which are worth
more because projects in other countries could in future be banned.
Analysis
for the Guardian by campaign group Sandbag of the figures for 2008, the
most recent available, looked at the extra allowances accrued by four
big sectors: iron and steel, coke ovens, metal ore processing, and
cement, which together have 800 installations covered by the trading
scheme, and include big names like ArcelorMittal, Thyssenkrupp, Corus,
Holcim and Cemex.
Sandbag calculated the four sectors received
permits to emit 66m tonnes more carbon dioxide than they needed in
2008, partly because predicted growth did not happen and partly because
of the recession towards the end of the year. In addition they bought
cheap offsets for a further 18m tonnes plus, which would then free up
more EU allowances. In total the surplus allowances would have been
worth nearly €1.2bn (£1.1bn) in 2008, or just over €1.1bn at today's
closing price of €12.99. Based on the forecast average price of €30 a
tonne for the third phase of the ETS from 2013-2016 by analysts Point
Carbon they would be worth more than double that in future.
If
the companies stockpiled over-allocated surpluses for the whole of this
phase of the ETS, from 2008-2012 they could be worth as much as €3.2bn
at today's prices, said Sandbag. Any more credits released by buying
offsets would be on top of that.
"If they [companies] want
cashflow, which in the current climate they may, then they'll cash in
the allowances," said Bryony Worthington, Sandbag's founder and
director. "But if they are thinking long-term then they'll be thinking
'I should probably hold on to them and insulate myself for the future'."
ArcelorMittal,
the world's biggest steel producer, has pledged to use profits to
invest in future energy savings to reduce pollution, but there were no
guarantees they or any other company would have to do this, said
Worthington. "How do we police it, they could be using it for dividends
or anything," she added.
Ian Rodgers, director of UK Steel, said:
"The climate change agenda won't affect the amount of steel consumed,
but it will determine where it's produced."
According to industry
estimates, the third phase could cost heavy industry – including
steelmakers such as Corus, the chemicals industry and the ceramics
industry – €1bn a year.
Sandbag will tomorrow publish in-depth
analysis for 2008, including the biggest buyers of offsets from
developing countries, and a map linking every offset scheme with their
European customers.