EU Court Said to Dismiss Steel Producers’ Suit on Carbon

The European Court of Justice declared inadmissible two lawsuits brought by European steel producers contesting the European Union’s method for allocating free carbon permits, according to two EU officials.

The court dismissed a case filed by companies including ThyssenKrupp Steel Europe AG and Voestalpine Stahl GmbH, according to the EU officials, who declined to be identified, citing policy. It also declared inadmissible a suit brought by the association of European steel producers Eurofer, the group confirmed in a statement e-mailed today.

The decision of the court is that a complaint on the distribution of allowances, which is based on benchmarks designed by the European Commission, should be judged by a national court, according to Eurofer.

“The decision does not mean that the steel benchmarks set by the Commission are correct,” the Brussels-based group said in an e-mailed statement. “The ETS directive makes it very clear that the benchmarks must be set at a level which allows the allocation of sufficient emission certificates to the best performing installations.”

The commission is satisfied that the court sided with it, said Isaac Valero-Ladron, climate spokesman for the EU regulatory arm.

Carbon allowances for December rose as much as 1.6 percent to 6.55 euros ($8.24) a metric ton on ICE Futures Europe exchange in London and closed at 6.54 euros. The contract was still down 62 percent in the past year as investors’ confidence in the world’s biggest emissions market has been undermined by a recession and debt crises.

Steel producers grouped in Eurofer said in their lawsuit last year that carbon-efficiency benchmarks for distributing a dwindling supply of free allowances to the industry in the 2013-2020 period infringe the law and will result in additional costs to producers of about 5 billion euros.

National Level

The court’s decision “does not mean that the steel benchmarks set by the Commission are correct,” Eurofer said in an e-mailed statement. “The decision of the General Court is that a complaint on the allocation of allowances (which are based on the benchmarks) has to be judged by a national court after allocation of certificates on national level.”

The steel lobby said it would pursue its case at a national level, after which it would again take the matter up with the EU.

The bloc, which has given away the majority of emissions permits since it started its carbon cap-and-trade plan in 2005, will sell the majority of them in the so-called Phase 3 that starts next year.

The benchmarks favor the most efficient manufacturers in the emissions trading system, also known as the ETS. Companies that emit more than the benchmarks will need to buy permits to cover their discharges, according to the commission.

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