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ArcelorMittal takes lead in leveraging carbon offsets

Monday, 26 November 2012

ArcelorMittal used just over 29 million carbon offsets to meet its commitments under the European Emissions Trading System (ETS) in 2011, according to ETS data assessed by Sandbag, an environmental research and campaigning organization. This marked a dramatic increase from 22,167 offsets in 2010 and 41,948 offsets in 2009.

The increase came after the collapse of global carbon credit markets which resulted in a marked difference in price between the main ETS credit – the European Union Allowance (EUA) – and the UN-issued Certified Emissions Reductions (CERs) and Emissions Reduction Units (ERUs).

As steelworks in Europe have to surrender one carbon credit for each metric ton of carbon dioxide they emit and have been provided with sufficient free EUAs to meet their needs, they can use the gains from utilizing the cheaper credits and selling EUAs to bolster their financial results. ArcelorMittal earned $93 million from the sale of 7 million EUAs in 2011. The company said all proceeds from the sales went to investment in energy-efficiency projects.

On November 22, March 2013 futures prices of EUAs settled at €6.85/mt, while CERs and ERUs were at €0.63/t and €0.52/t respectively. Among the three, EUAs alone have structural demand as they are required for compliance under the ETS. Only a certain percentage of emissions under the ETS can be accounted for using offset credits.

A recent Sandbag report also noted that several steelmakers with facilities in Europe had bought offset credit from steelmakers in other regions, in particular China and India, raising concerns that they could be seen as providing funding to their competitors. However, of the more than 29 million offset credits used by ArcelorMittal in 2011, only 460,769 were from the metals industry and of these, 198,529 were from a project at ArcelorMittal’s own Kriviy Rih plant in Ukraine.

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