The European Union’s steel and cement industries could raise EUR6.3bn combined by 2012 from the sale of excess carbon permits, Citi Investment Research & Analysis said in a note on Tuesday.
Under the EU’s Emissions Trading Scheme (EU ETS), the emissions of heavy industry and power companies are capped. They buy carbon permits to cover emissions exceeding the caps or sell them when emissions are less.
In the industrial slowdown of 2009 and 2010, many industrial companies sold carbon permits they did not need because of reduced emissions output.
The steel and cement sectors have the biggest surplus, because their production is unlikely to recover to 2008 levels before 2012, and they will probably continue to sell permits to raise cash, Citi said in a research note.
At current market prices, the steel sector’s surplus in 2008 and 2009 is worth EUR2.1bn and the cement industry surplus is worth EUR1.1bn, it added.
"Were the 2008 surplus to be repeated in 2010, 2011 and 2012, their value on the secondary market could rise to EUR4.4bn for steel and 1.9 billion for cement at current market prices," Citi said.
"Lower output projections and higher carbon prices would obviously raise their value further."
The EU ETS is currently in its second trading phase (2008-2012). The third and final phase will run from 2013 to 2020.