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ENVIRONMENT

Climate Change and Allowance Trading

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Application of the new Directive on Greenhouse Gas Emissions Trading Allowances

Benchmarking

Benchmarking is a methodology adopted by the new Directive on Trading Rights that will be used to obtain the allocation of allowances in affected companies. Benchmarking calculates the allocation on the basis of the emissions of the most efficient facilities in each sector or subsector considered.

In 2010, UNESID played a significant role in seeking to have the model used for calculating CO2 in the sector in Spain accepted for benchmarking in Europe. UNESID defended this model because it provides greater simplicity, as certain carbon inputs would be offset by outputs of steel, scale, slag and dust, and the net balance of CO2 as a raw material and product could be considered almost zero. The system proposed by UNESID made the calculation more straightforward, being more economical and generally applicable, in terms both of monitoring and of information and verification. Furthermore, it would facilitate the future exporting of the system to third-party countries when truly binding international agreements are developed.

UNESID was actively involved at the heart of Eurofer in the technical work to ensure the free allocation of emission allowances to the process gases generated in the steel manufacturing business.

Elsewhere, and given their particular nature, producers of speciality steels, forging steel and steel tubes requested the development of a specific benchmark for their products, independently of the one for carbon steel. UNESID supported this request, which was also backed by several European associations, although it was finally agreed not to proceed with the matter. Nonetheless, towards the end of the year UNESID managed to have these steels at least considered within the benchmarking of high alloy steels. The initial situation was unfair in the allocation for steels of this nature. UNESID held meetings with both the European Commission and the heads of the Benchmarking Working Group in Spain, informing them of the need to correct this error. The European Steel Tube Association (ESTA) also supported the proposal by becoming actively involved in several of the actions undertaken by UNESID. This consideration will involve a further allocation of at least 20% for these plants, which have a very large output in Spain, and it will reduce their international exposure to the cost of CO2.

On 15 December the Committee issued its proposal for the free allocation of emission allowances for the 2013-2020 period.


Compensation of electricity costs

The sector has been lobbying for the compensation of the value of the CO2 tax in the price of electricity and pursuing numerous actions accordingly both domestically and in Europe. The repercussion of the cost of the CO2 in the electricity industry on the price of all electricity will have a serious financial impact on the sector, compromising its competitiveness.

The EU’s Directorate General for Competition drew up a document which it presented in April, in which it affirmed that electricity compensation would be granted to those sectors affected by the emissions trading system. According to this document, the right to compensation would be calculated on the basis of the Gross Value Added (GVA), the cost of electricity and the volume of trade. The sectors receiving this compensation would be those in which the cost of electricity consumed exceeds 0.35% of the GVA of their product, provided they fall within certain thresholds of trading volume.

UNESID joined the working group set up within Eurofer to defend the position of Spanish companies and avoid any distortion in competition within the European Union.

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