EU Emissions Trade Scheme - the case for free allocation

This presentation by UK Steel Director Ian Rodgers argues that:

• Steelmaking is unavoidably carbon-intensive, thus internalisong the cost of carbon would add substantial cost burdens to the sector.
• The EU steel industry is heavily exposed to international competition.
• Demand for steel will continue to grow.  Steel is an essential component of modern life.
• If the steel industry is put in the position where it is forced to buy carbon allowances after 2012, the result will be the "leakage" of carbon emissions from the EU to other, non-carbon-constrained countries, as steel production prgressively shifts to these more competitive economies  Global emissions will not reduce.
• Steel must therefore receive full and free allocations in the post-2012 EU Emissions Trading Scheme.
• Higher carbon prices post-2012 will rsult in higher electricity prices. The impact on electricity-intensive industries, such as electirc arc furnace steelmaking, must also be taken into account.

The full presentation, including the text of the speech, can be downloaded in PowerPoint.