ThyssenKrupp, ArcelorMittal: Spotlight in EU Emissions Issue
ThyssenKrupp, ArcelorMittal: Spotlight in EU Emissions Issue

27 November 2023 – Billions of euros are given away to steel giants like ThyssenKrupp or ArcelorMittal year after year via EU emissions trading, which continue to lack any desire to reduce CO2 emissions. Why should they? After all, pollution pays off in the EU. And rising from the ashes: Europe’s basic materials stocks are on the verge of a comeback.

Rising from the Ashes: Europe’s Basic Materials Stocks Set for a Comeback

The STOXX 600 Basic Resources Index shows that European basic resources stocks are on the verge of a significant positive turnaround. Despite a difficult year in which their return shrank by almost 12% compared to the impressive rise in the market as a whole, things are on the up again. Deutsche Bank recently came to this analysis.

The Tide is Turning: Pandemic Price Adjustments Nearing Completion

The initial dip was largely due to adjustments in the prices of base metals and ores, which had soared during the pandemic due to specific economic policies, fuelling inflation. However, there’s a silver lining: these adjustments are nearing completion.

A Brighter 2024: Anticipated Interest Rate Cuts and Global Economic Revival

With expected interest rate cuts and a revival of the global economy in 2024, optimism is building. Analysts foresee an increase in demand and prices for these key materials.

Inventory Shrinkage Signals Potential Supply Crunch by 2025

Reduced inventories, stemming from high opportunity costs in the current interest rate climate and anticipatory actions for an economic downturn, hint at a possible supply shortage by 2025.

Green Transformation Fuels Commodity Demand: A Golden Opportunity for Europe’s Stocks

This potential shortage could become particularly pronounced if the global economy maintains its growth trajectory and the push for commodities in the “green transformation” continues to intensify. This scenario spells a promising opportunity for basic materials stocks in Europe, suggesting a significant turnaround and a future filled with robust growth prospects.

Steel Titans in the Spotlight: ThyssenKrupp and ArcelorMittal’s Role in the EU’s Emissions Controversy

The Irony of Iron: How Steel Majors Skirt Emissions Costs

In the intricate tapestry of climate change and industrial responsibility, a recent report by Carbon Market Watch, titled “The Emissions Aristocracy,” has pulled a crucial thread. Dated November 2023, this report scrutinizes the European Union Emissions Trading System (EU ETS) and its impact on major polluters, particularly spotlighting the steel industry.

ThyssenKrupp and ArcelorMittal: The Billion-Dollar Free Pass

The report names 30 companies as the main contributors to more than 50% of emissions in the EU Emissions Trading Scheme, with steel giants ArcelorMittal and ThyssenKrupp leading the way. ThyssenKrupp, a conglomerate with a turnover of 38.2 billion euros, received 1.8 billion euros worth of free pollution allowances in 2022, emitting more than 23 million tons of CO2, which is a startling revelation. Compared to ArcelorMittal, however, ThyssenKrupp almost seems like a dwarf. The steel group ArcelorMittal, headquartered in Luxembourg, had even received free pollution rights worth more than 3.7 billion euros in 2022. Almost 600 million euros of this went directly into the group’s pockets due to surplus free CO2 certificates.

Free Permits: A License to Pollute?

These free permits, intended to aid transitional decarbonization, have instead become lucrative assets for these corporations. While the power sector pays for emissions, steel, cement, and petrochemical industries reap the benefits of substantial free permits, undermining the true cost of pollution.

Decarbonization: A Distant Dream?

Despite the EU’s ambitious climate targets, the steel sector, as epitomized by ThyssenKrupp and ArcelorMittal, has shown tepid progress in reducing emissions. This stagnation is attributed to the free allocation of permits, creating a disincentive for green innovation.

Urgent Reforms: A Call to Action

The report is more than an exposé; it’s a call for urgent reforms. It argues for phasing out free allocations and enforcing stricter benchmarks, ensuring that polluters pay their dues, aligning the EU ETS with the EU’s overarching climate goals.

A Path Forward? Not Really…

The “Emissions Aristocracy” report is not just an insult, but also a wake-up call. It also underlines once again the need for a paradigm shift in the way we deal with industrial emissions, with the steel industry, represented by ThyssenKrupp and ArcelorMittal, leading the way. As we move towards a more environmentally friendly future, the actions of these industrial giants will have to be increasingly scrutinized.

Gloomy Shadows on EU Green Deal – Or Who Pays the Bill?

Seen in the wider context of the European Green Deal, the Carbon Market Watch report also casts a further gloomy shadow over the EU Carbon Border Tax CBAM. While large corporations in the EU are allowed to continue emitting CO2 unhindered and are even rewarded with billions of euros for doing so, small and medium-sized companies in the EU are allowed to foot the bill – while Brussels is aware of precisely this critical point, but is trying to “sustainably” ignore and equalize it.

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