DJ 3rd UPDATE: EU Crt: ArcelorMittal CO2 Emissions Case Invalid

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Steel giant ArcelorMittal (MT) has lost its legal battle against what it sees as unfairness in the way industries are covered by Europe’s carbon trading system, in a ruling from Europe’s highest court Tuesday. 

The law establishing the system “doesn’t breach the principle of equal treatment,” the European Court of Justice said in a statement Tuesday.

Eight ArcelorMittal subsidiaries said the system discriminates against steel producers, as it doesn’t cover aluminum or plastic-producing chemical companies. ArcelorMittal claims that these sectors should also be included in the system because their products compete with steel and involve similar emissions.

The European Union in 2005 created the Emissions Trading System to cap and trade CO2 emissions allowances. Companies emitting more carbon dioxide than allowed have to buy extra permits, or sell them if their emissions are lower.

The plastics, aluminum and steel sectors are all comparable as they each contribute to CO2 emissions, the court found. However, it was legitimate to exclude the chemical and aluminum sectors from the ETS as it started because the aluminum-producing sector’s overall emissions were much lower than those of the steel companies, while the very large number of plastics-producing chemical installations would have made it much harder to run the system, the court said.

The ruling comes as political moves are already leading to expanding ETS’ coverage. E.U. governments agreed last week on new rules broadening the ETS scope to new industries such as aluminum, starting in 2013. European Parliament representatives gave a preliminary green light to the plan Saturday, and the parliament assembly will vote on the new rules Wednesday.

Currently, the ETS covers carbon dioxide emissions from power stations, oil refineries and a number of other industries, including glass, iron and steel, concrete and paper.

The case was brought by Arcelor’s French subsidiaries in 2005 against the French government for rules which enact the Emissions Trading Directive into French law. Arcelor subsequently merged with Mittal Steel, to form ArcelorMittal.

The firms challenging the French law are Societe Arcelor Atlantique et Lorraine, Societe Sollac Mediterranee, Societe Arcelor Packaging International, Societe Ugine & Alz France, Societe Industeel Loire, Societe Creusot Metal, Societe Imphy Alloys and Societe Arcelor.

-By Mike Gordon, Dow Jones Newswires; +352 691 180 766;

(END) Dow Jones Newswires

12-16-08 0906ET

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