ArcelorMittal calls for carbon levy on imports to EU companies
Lakshmi Mittal concerned new rules will discriminate against European producers
The head of steel group ArcelorMittal has urged Brussels to look at increasing the cost of goods imported to Europe from countries without a carbon price to help protect EU companies from the bloc’s latest efforts to curb global warming.
Lakshmi Mittal, chairman and chief executive of the world’s largest steelmaker by output, says the contentious measure is needed because of moves to lift flagging carbon prices in the EU’s emissions trading system, a cornerstone of Europe’s policies to combat climate change.
Prices have languished well below €10 a tonne of CO2 for much of the past four years, too low to fulfil the scheme’s aim of spurring low carbon investments. Reforms being considered by the European Parliament this week are aimed at lifting prices after 2020 by making carbon allowances more scarce, a step big energy users such as steel companies are watching closely.
Under the 12-year-old emissions trading scheme, users have to hand in an allowance for every tonne of carbon they emit — currently worth less than €6 a tonne of CO2. ArcelorMittal produces up to two tonnes of CO2 for every tonne of steel it makes, a spokeswoman said.
Mr Mittal said the measures to raise carbon prices could translate into a “carbon tax” of about €30 a tonne for the European steel industry — an amount that international producers selling into the EU would not be obliged to pay.
Writing in the Financial Times, he said this amounted to a large competitive advantage for foreign producers that could jeopardise “the long-term viability of much of Europe’s steel industry” and boost steel imports from countries with weaker environmental standards than Europe.
“We believe, therefore, that Europe should consider the introduction of border carbon adjustments to protect European competitiveness,” he said.
The European Commission said on Sunday it saw no need for Mr Mittal’s border adjustment measures because they “send the wrong signal to the international community and are challenging to implement”.
A commission spokeswoman said the best way to address his concerns was to supply enough free carbon allowances to exposed industries and work on “comprehensive global climate action”.
Carbon border adjustments can take various forms, including taxes on imports. They were backed by a group of prominent Republican elder statesmen in the US last week, including former treasury secretaries James Baker and George Shultz.
Cameron Hepburn, professor of environmental economics at the University of Oxford and an adviser to the US group, said the economic rationale of such measures was “unassailable” because they level the playing field for companies affected by climate change policies and spur more carbon pricing abroad.
However, critics argue carbon border taxes would spark trade disputes, because they could be deemed a ploy to protect local industries, and say it is hard to measure the precise carbon content of imports or compare different national carbon pricing systems.