ArcelorMittal, Tata Lead Europe Emitters With CO2 Permit Surplus

ArcelorMittal and Tata Steel Ltd. (TATA) were given 62.4 million more free carbon permits than the two steelmakers used last year, the most of any European companies.

The European Union allowances, awarded by governments, are worth 839 million euros ($1.1 billion), assuming a value of 13.45 euros each, the average price on London’s ICE Futures Europe exchange of the December 2011 contract in the 12 months to expiry. That’s a 36 percent increase in permits from a year earlier, according to preliminary European Union data compiled by Bloomberg.

Europe’s flagging economy sapped demand for metals, cement and power last year, increasing an oversupply of allowances held by companies. The entire carbon program had 2.1 billion euros worth of spare allowances last year, according to Bloomberg calculations. Factories and power stations got 153 million more emissions permits than needed. Emissions dropped 2.5 percent across Europe, according to the data.

“This decrease in CO2 emissions surprised most analysts and might be due to the economic stagnation in Europe,” Cedric Bleuez, a managing director at Carbon Market Data in Paris, said in a statement. That’s “combined with the effect of energy efficiency and renewable energy policies,” which reduces emissions from power generation, he said.

ArcelorMittal Surplus Rises

ArcelorMittal (MT)’s surplus rose 47 percent to 47.3 million permits last year. The company has had the highest surplus out of all the installations in the program since trading started in 2005. Almost 13,000 factories and power stations in Europe must comply with the bloc’s emissions trading system by handing in carbon permits each year.

ArcelorMittal spokesman Giles Read in London did not return a call seeking comment. Bob Jones, a spokesman for Tata Steel in London wasn’t immediately able to comment on the allowances.

The program’s second phase, which operated in the five years through 2012, distributed free allowances to help companies manage their costs. Those free allowances will be reduced from next year. Any spare permits can be sold into the market or saved for use in later years.

RWE AG (RWE) and Vattenfall AB were the two biggest emitters last year and were required to purchase the most allowances, the preliminary data show. RWE AG (RWE) emitted 55 million metric tons of carbon dioxide above its quota, which would have cost about 739 million euros at the average price, while Vattenfall produced 31 million tons more.

To contact the reporters on this story: Catherine Airlie in London at cairlie@bloomberg.net; Mathew Carr in London at m.carr@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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