ArcelorMittal (MT), the world’s biggest steelmaker, may have last year used United Nations emission credits to add a 95.8-million-euro ($126 million) profit to a windfall from millions of free European Union carbon permits.
The Luxembourg-based producer received an excess allocation of 47.3 million metric tons of carbon permits last year, which were worth 636 million euros at the average 2011 price on London’s ICE Futures Europe exchange.
ArcelorMittal handed in 29.4 million tons of UN offsets for compliance last year, more than double any other company in the bloc, according to data published today by the European Commission in Brussels and compiled by Bloomberg. It may have acquired those credits by swapping some of its free EU allowances, which were on average 3.26 euros more expensive, according to an ICE spread contract.
“Swapping would have increased their profits,” said Konrad Hanschmidt, an analyst for Bloomberg New Energy Finance in London. Many companies have sold more-expensive EU allowances gained for free for cheaper UN credits. This allows them to potentially raise cash at less than commercial bank rates, or lock in profit from trading while maintaining compliance with the program, the world’s biggest cap-and-trade market by traded volume, he said.
Under the program’s rules, factories and power stations can use offset credits for a portion of compliance. EU carbon permits for December fell 3.7 percent today to 7.29 euros a metric ton on ICE at 3:52 p.m. UN Certified Emission Reduction credits dropped 2.3 percent to 3.77 euros.
Giles Read, an ArcelorMittal spokesman in London, declined to comment ahead of the company’s first-quarter financial results, which are to be published on May 10.
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