With at least nine firms opening the assault in a Dutch court, Europe’s heavy industry is firing a barrage of legal challenges at cuts in the carbon permits they will get up to 2020, subsidies worth over €4 billion.
Companies including ExxonMobil, Dow Chemical and Shell have challenged the Dutch government over what they say is an under-allocation of carbon allowances by the European Commission under the European Union Emissions Trading Scheme (ETS), which are given free to heavy industry.
According to legal advice prepared for several chemical and steel firms and seen by Reuters Newsagency, emissions generated at their plants from producing power by capturing heat (CHP) and burning waste gas were incorrectly treated by the EC as attributable to the power sector, which has to pay for permits.
As a result, the related permits are to be auctioned by governments rather than given to industry, removing subsidies for manufacturers that source energy through those two activities.
“This distribution was not done in line with EU rules,” the legal advice said.
Reuters reports a spokesman for the Netherlands’ national court said at least nine companies had so far lodged complaints ahead of a deadline.
“Based on a conservative estimate, European industry has been unjustifiably under-allocated 168 million permits in 2013 and around 800 million permits up to 2020,” said the Utility Support Group’s Vianney Schyns.
Reuters reports Mr Schyns is a legal expert advising a consortium of chemical firms including SABIC, OCI Nitrogen, Ineos and Lanxess.
The allowances are valued at more than €4 billion, based on average EU carbon future prices of around €5.50 between now and 2020.
Mr Schyns added that he was helping another 10 firms file complaints in the Dutch court this week.
Another legal source advising firms said major industrial companies including Tata Steel and BP would also launch appeals in the Netherlands and in other countries.
Both the EC and the Dutch Ministry of Infrastructure and Environment, the government body named in the challenges filed in the Netherlands, declined to comment.
Three of the firms named confirmed that they were appealing the EC’s decision, adding that they had collaborated with others from their industries to coordinate their arguments.
Sources said firms may find it difficult to challenge the EC directly, so they are being encouraged to file in as many national courts as possible in the hope that at least one escalates the issue to the EU’s General Court in Luxembourg, where an over-arching verdict would be expected.
Before companies in other countries can lodge complaints, their governments must first notify them as to how many permits they will get, a process that has been held up in most EU member states for months due to bureaucratic delays.
Under the EU ETS, the bloc’s main tool to fight climate change, greenhouse gas emissions from Europe’s 12,000 biggest polluters are capped and firms must surrender a permit for every tonne of carbon dioxide they emit.
In the scheme’s current trading phase, which runs from 2013 to 2020, the majority of emissions allowances earmarked for utilities are sold, while heavy industry including makers of cement and steel receive most of their quota for free.
This is to help them compete with rivals in countries outside the EU that have less stringent environmental regulation, and because the firms argue that power generators pass on their carbon costs to them.
