Bloomberg News

ArcelorMittal, Tata Share 839 Million Euro CO2 Windfall in 2011

April 11, 2012

ArcelorMittal and Tata Steel Ltd. (TATA) shared a 839 million euro ($1.1 billion) windfall of European Union carbon permits last year, after needing fewer than they were given for free.

The two steel companies, which are among Europe’s 20 biggest carbon-dioxide emitters, held 62.4 million spare emissions permits between them, according to preliminary European Union data compiled by Bloomberg. Carbon permits for 2011 were worth an average of 13.45 euros in their last 12 months of trading on the ICE Futures Europe exchange in London.

Europe’s flagging economy sapped demand for metals, cement and power. That increased an oversupply of allowances held by companies. The entire carbon program had 2.1 billion euros worth of spare allowances last year, according to Bloomberg calculations. Factories and power stations got 153 million more emissions permits than needed. Emissions dropped 2.5 percent across Europe, according to the data.

“This decrease in CO2 emissions surprised most analysts and might be due to the economic stagnation in Europe,” Cedric Bleuez, managing director at Carbon Market Data in Paris, said today in a statement. That’s “combined with the effect of energy efficiency and renewable energy policies,” which reduces emissions from power generation, he said.

ArcelorMittal Surplus Rises

ArcelorMittal (MT)’s surplus rose 47 percent to 47.3 million permits last year. The company has had the highest surplus out of all the installations in the program since trading started in 2005. Almost 13,000 factories and power stations in Europe must comply with the bloc’s emissions trading system by handing in carbon permits each year.

The program’s second phase, which operated in the five years through 2012, distributed free allowances to help companies manage their costs. Those free allowances will be reduced from next year. Any spare permits can be sold into the market or saved for use in later years.

RWE AG (RWE) and Vattenfall AB were the two biggest emitters last year and were required to purchase the most allowances, the preliminary data show. RWE AG (RWE) emitted 55 million metric tons of carbon dioxide above its quota, which would have cost about 739 million euros at the average price, while Vattenfall produced 31 million tons more.

To contact the reporters on this story: Catherine Airlie in London at cairlie@bloomberg.net; Mathew Carr in London at m.carr@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net


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