New Emission Regulations, New Protests from Metal Producers

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Global Trade, Green

New carbon taxes from the Australian government worried zinc producers last month, but environmental regulations are starting to concern metal producers in other areas, too. Now, the Wall Street Journal reports that the European Union recently prepared a similar CO2 emission-reduction strategy. And like the zinc producers in Australia, steelmakers in European countries aren’t waving flags of approval to put the “green” in “greenhouse gases.”

To reduce greenhouse emissions, the EU proposed cutting “total CO2 emissions within the economic zone to 20% below 1990 levels by 2020. The target would rise to 30% if the EU strikes an international agreement to reduce CO2 emissions,” the Wall Street Journal explains. “Because the EU is taking a more lenient stance toward businesses that are outside the scope of the program — such as agriculture and transport, among others — deeper cuts will be required for the bloc’s industrial sector.”

Despite the environmental benefits, European steelmakers believe the proposed rules could lead to more job cuts than emission cuts, harming the European economy as buyers purchase cheaper steel from producers without these pollution regulations. In addition to generating about âš ¬140 billion ($178 billion) in annual sales, the European steel industry reportedly employs approximately 370,000 people. On top of that number, suppliers and steel buyers account “for a total of 22 million [additional] jobs,” according to the European Confederation of Iron and Steel Industries.

An outline for the plan still hasn’t been released, but the laws facing electricity producers,  set to  deal with CO2 allowance auctions, don’t seem promising to metal producers. “Full auctioning of CO2 allowances is a real threat,” Wolfgang Eder, chief executive of Austrian speciality steel maker Voestalpine, told the Wall Street Journal. The steel industry can expect to spend between âš ¬50 billion and âš ¬100 billion if steelmakers are required to purchase permits.

Similar to the complaints from Nyrstar in Australia, Lakshmi Mittal, chief executive of steelmaker ArcelorMittal, expresses concern about an unfair disadvantage: “Why are we [European steel producers] the only ones to be subjected to stringent CO2 limits while there are other producers in the world who do not have stringent requirements for CO2 emissions? If we continue to follow those stringent requirements, there could be a displacement of jobs in the future because European industry wouldn’t be as competitive.”

–Amy Edwards

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