The EU Commission was today urged to review its decision to provide free allowances to energy intensive industries in phase three of the Emissions Trading Scheme, following new research revealing how the steel and cement sectors lobbied intensively for special treatment, using misleading information .
The Commission, which is currently considering increasing the EU's carbon emissions reduction target to 30 per cent, is due to assess the decisions on carbon leakage this June .
The new report, published by Corporate Europe Observatory (CEO), finds that the steel and cement industries lobbied the Commission extensively, claiming that auctioning would damage EU competitiveness and exaggerating the resulting carbon leakage.
The findings come as energy intensive industries in Europe intensify their lobbying against the 30 per cent target  – while at the same time reporting windfall profits as a result of selling surplus permits, issued for free under the ETS .
Olivier Hoedeman, research coordinator at Corporate Europe Observatory, said:
"The steel and cement sector lobbies led a frenetic campaign to ensure they did not have to pay for emissions permits ahead of phase three of the ETS. They succeeded in persuading the EU Commission to effectively subsidise their operations, and as a result are likely to benefit from windfall profits at the expense of the climate.
"The Commission has given in far too easily to industry lobbying and pressure from national governments and promised free permits. It must now claw back its promise and ensure that industry contributes its share of the EU’s urgently needed carbon cuts."
Eurofer, the trade group representing the steel manufacturers, Cembureau, the lobby group for the cement sector, and individual companies, including Arcelor Mittal (steel) and Lafarge (cement) lobbied extensively, claiming that the auctioning proposal would result in massive job losses in the EU. Arcelor Mittal told the Commission that 90,000 jobs were directly at risk in Germany alone.
Hoedeman continued: "Under the current system, industries can simply avoid taking action by claiming it will damage their competitiveness. This is another example of how the ETS is vulnerable to lobbying by industry."
Olivier Hoedeman, Corporate Europe Observatory: +32 4 7448 6545
 "Industry lobbying on emissions trading scheme hits the jackpot: the cases of Arcelor Mittal and Lafarge", Corporate Europe Observatory, May 2010. See http://www.corporateeurope.org/climate-and-energy/content/2010/05/indust...
 Carbon leakage refers to the idea that if industries relocate to areas outside of the EU because of the ETS, emissions will increase among other reasons because of the need to transport products back to the EU.
 As mandated by article 10b of the Directive 2009/29/EC of the European Parliament and of the Council of 23 April 2009 amending Directive 2003/87/EC so as to improve and extend the greenhouse gas emission allowance trading scheme of the community
 The European Alliance of Energy Intensive Industries (which represents Eurofer, Cembureau and others) has opposed any increase on the 20% emission reduction target – see http://news.mining.com/2010/05/08/eu-industry-opposes-climate-change-tar...
 Arcelor Mittal has sold surplus permits worth 108 million euros since 2007; Cement manufacturer Lafarge reported profits of 142 million euros from the sale of carbon credits in 2009.