School children at KA Atheneum, in Zelzate, do not learn much about climate change. “We are not interested in talking about this topic”, said Anja Van Parys, the school headmaster, rejecting our request for an interview.
Still, these kids would be surprised to know that their health depends on the way policy makers and industries deal with global warming. If they climbed on the schoolyard roof, they could even see the planet heating up in real time along the waterfront docks, where smoke stacks blow out carbon dioxide (CO2), just a few kilometers away.
Zelzate is one of the villages inside Ghent’s industrial harbor, home to the second largest flat steel plant in Europe, owned by Arcelor Mittal, a world leader in the steel sector. This giant factory, employing 4,000 locals, is the Flemish champion emitter of CO2 as well as of fine dust, or particulate matter (PM), typically responsible for health issues among youngsters.
In 2011 a joint investigation by Flemish researchers proved that PM concentrations from all sources (industry, transport, agriculture, households, etc.) are responsible for premature deaths among children born in pollution hotspots exceeding EU warning limits, such as Ghent’s harbor.
According to government records, more than 60% of PM emitted in Ghent’s district is associated with the industry. Arcelor Mittal accounts for 10 to 14 percent of all PM concentrations in Zelzate and in neighbouring villages, topping all other local sources. However, about 75 percent of the total dust in the Ghent industrial area originates from neighbouring countries, as Flanders is sandwiched between some of Europe's major industrial regions.
10,000km east of Zelzate
The reason why Zelzate’s air is filled with nasty particles is a result of unsuccessful climate regulations. It all started 10,000km east of Zelzate, in the Republic of China. Back in 2005, half-way between Beijing and Shanghai, the State-owned refrigerants factory Shandong Dongyue had the same genius idea that other Chinese chemical plants had: forging their emissions scheme in order to take advantage of the international emissions trading mechanism and maximize profits.
Within the UN-overseen mechanism, set up by the Kyoto Protocol, climate projects in developing countries that eliminate CO2 or other greenhouse gases are rewarded with certificates called carbon credits. Each certificate equates to a ton of CO2 removed from the atmosphere. Projects owners are free to sell those certificates or credits worldwide.
The project launched by Shandong Dongyue aimed to destroy HFC-23, a greenhouse gas resulting from refrigerants production generating a global warming effect a thousand times worse than CO2. The company intentionally over-produced refrigerants to boost the volumes of HFC-23 to be captured and create artificial emission reductions. In this way, it secured and shipped overseas millions of inflated credits that did not correspond to real greenhouse gas abatements.
Some of the biggest European polluters happened to be the main buyers for such dodgy credits since they could use them to compensate for their own emissions and meet the EU caps. EU regulators eventually banned the HFC-23 credits as of 1st May 2013 but the harm was done. The forged certificates already represented over 50 percent of the total credits exchanged in the European Emission Trading System (ETS). Carbon trading intermediaries had no other option than massively selling off the outlawed certificates before they turned into junk, pushing prices of all carbon credits to a record low.
In addition, the “carbon price” also dropped due to an over-allocation of emission permits relative to companies’ actual emissions, which had sharply decreased as a result of the financial crisis. In fact, the ETS legislation authorizes national governments to distribute permits amongst companies to alleviate their CO2 reduction burden.
Since companies are allowed to partially replace national permits with international credits, big polluters played a smart game: They kept buying ultra-cheap credits to save bulks of exceeding permits (also depreciated through market-driven domino effect) for future emission compensations. In this way, they will be able to comply with their obligations at the lowest cost, without having to invest in innovative technologies to substantially reduce their emissions.
It is no surprise that the Arcelor Mittal group, which owns a dozen plants across Europe, is the EU largest buyer of credits: According to statistics by Sandbag, a London-based NGO that monitors the integrity of the ETS, the steel industry is one of the largest CO2 (and PM) emitters in Europe.
Pupils at KA Atheneum may still wonder why this odd “hot air trading” should bother their tranquil life in Zelzate. So, let’s go back to the Chinese climate scam.
During their journey from Asia to Europe, large volumes of questionable credits supplied by Shandong Dongyue ended up in the portfolio of a few plants operating in Flanders, including Electrabel and AlcoBiofuel in Ghent. Arcelor Mittal’s plant got the biggest slice: Almost 4.1 million HFC-23 credits until 2012, based on Sandbag calculations. Nearly half of those credits replaced the permits that the company sold to fund its energy efficiency investments. However, the majority of credits added up to the generous permits granted by the Flemish government between 2008 and 2012, which allowed Arcelor Mittal an excess of 26 millions permits above its 20 million tons of emissions, as documented by EU data.
Now, the question is: Why should Arcelor Mittal pay a fortune to reconvert its local plant in Ghent, powered by high CO2 emitting coal, into a much a cleaner plant when it can offset its emissions by using its left-over permits or buying more permits and credits available, respectively, for less than €3 (USD 3.3) and €1 (USD 1.2) per ton?
“So far, we have invested over €200 million euro (USD 224 million) in pollution control systems”, said Ronald Mortier, Head of the Environmental Care Department at Arcelor Mittal in Ghent. “Our CO2 emissions decreased by 20 percent since 2002 and our dust spills by 80 per cent since 1990, but now we are reaching the limits of our technical possibilities. And, as of today, there is no viable alternative to coke for the steelmaking process out of iron ore”.
However promising alternatives do in fact exist. But steelmakers have no economic grounds to embrace them. Since 2004 Arcelor Mittal Group has carried out an ambitious €600-million-worth (USD 670 million) research project Ultra-Low Carbon dioxide(CO2) Steelmaking (ULCOS), backed by a consortium of major European steelmakers and co-funded by the EU.
The largest share of ULCOS budget supported the upgrading of present coke-based technologies. However, part of the money was spent to develop new technologies replacing coke with fuels containing less carbon, such as natural gas and electric power.
“Those technologies would allow us to reduce not only CO2 but also PM emissions, by up to 80 percent”, said Jean-Pierre Birat, formerly manager and responsible for ULCOS project at Arcelor Mittal Group, and presently Secretary General at European Steel Technology Platform, a Brussels-based organisation promoting innovation in the steel industry, “We achieved good results in the lab testing stage: With further investments, those technologies could reach the production stage in 10 years, but steelmakers will only adopt them when the projected long-term price of carbon is high enough to make gas-based and power-based production cheaper than coke-based production”.
Birat’s views are shared by EU officials. “Higher carbon prices would lead to technologies that enable higher levels of pollutant reduction becoming more economically viable”, said Joe Hennon, Environment spokesman at the European Commission. “Reducing the amount of burned fossil fuels is the most effective way of tackling both CO2 and PM emissions, even though industrial sectors covered by the ETS are responsible for a relatively low share of PM in the EU, compared to other sources, mostly households and transportation”, said John Van Aardenne, an expert on climate policies and air pollution at the European Environmental Agency.
The EEA has recently released an alarming report stating that, between 2009 and 2011, up to 96 percent of city dwellers in Europe were exposed to PM concentrations above the World Health Organization guidelines, which caused some to suffer from cadiovascular diseases.
Higher production costs
Market analysts foresee an increase in carbon prices due to the post-crisis recovery in industrial production that will boost both emissions and permit demands as a consequence. A price rise is also expected from the more stringent CO2 reduction obligations associated with the ETS reform recently backed by the European parliament. Steelmakers using coal would then have to bear higher production costs over time, unless they make forward-looking investment decisions to switch to low-carbon technologies.
The situation might look better in the future. “In the meantime, the ETS is at the mercy of political uncertainty”, said Richard Chatterton, Carbon Market Analyst at Bloomberg New Energy Finance in London. Through Eurofer, the powerful Brussels-based European steelmakers lobby, Arcelor Mittal has tried to water down all EU reform measures to invert the CO2 price curb.
“From now until 2020 we expect a permit shortage of 20 percent compared to the previous period, as a result of the new EU allocation procedures that took effect as of 2013”, said Wim Van Gerven, CEO of Arcelor Mittal Ghent, “Therefore, if prices go too high, say €30 euro (USD 33) per ton, we’ll simply go out of business or move to places, like China, where our international competitors do not have such a burden. Innovation would be reasonable only if the ETS were globalized so that everyone is submitted to the same rules”.
Unless this perfect “carbon world” wished by EU steelmakers becomes a reality and Arcelor Mittal commits to go ahead with its ULCOS project, pupils at Zelzate will hopefully grow up healthy despite the daily exposure to heavy metals and elemental carbon.
“Elemental carbon is probably one of the most harmful substances to human health, even though it represents the smallest fraction of PM”, said Edward Roekens, Head of Division at the Flemish Environment Agency, “80 percent of elemental carbon in Zelzate originates from local sources, including traffic and Arcelor Mittal’s blast furnaces where coke is burned to melt the iron ore and turn it into steel”. However, most of Arcelor Mittal’s PM comes from the transportation and handling of raw materials during the different production stages, as reported by several studies.
“PM affects the physical development of youngsters”, said Vera Nelen, Director of the Flemish Provincial Institute of Hygiene, field-research partner of the bio-monitoring project coordinated by the Flemishs institute for Technology research within a consortium including the Universities of Ghent, Antwerp, Hasselt, Leuven and Brussels, “This initiative will help map the exposure to pollutants and its effects on teenagers who live in Ghent harbour”.
Best available techniques
Since 2013 Nelen’s team has collected interviews, body samples and medical examinations from high school students aged 14-15, including those at KA Atheneum in Zelzate. Through combining different criteria, it will be finally possible to determine the true health impact of local industrial activities. Results started coming in at the end of 2014.
By 2016, the Flemish government will review Arcelor Mittal’s environmental licence, as announced in the anti-pollution plan approved in 2005. “Arcelor Mittal will have to reduce its PM emissions to the levels achievable through using the best available techniques included in the EU harmonised list for the steel sector”, said Joke Schauvliege, the Flemish minister of the Environment.
However, EU regulators, duly advised by the industry, decided that only widely used technologies, such as those associated to coal plants, must be considered as “best available techniques” from an economic perspective.
What about the environmental and health perspective? The best answer to this question came from Kevin Reygaerts, spokesperson of the residents association of Sint-Kruis Winkel, the closest village to the Arcelor Mittal plant: “When we discussed PM issues with the company management, they admitted that they will not do more than required by binding regulations. And, of course, public authorities don’t put too much pressure on the plant since it plays a strategic role in the local economy”.
Should the EU fail to enforce stricter ETS regulations, forcing innovation and reduction of highly polluting fossil fuels burning, Arcelor Mittal will continue to relay on coal for many years to come, thus contributing to worsen both climate change and health quality in the Ghent harbor neighbourhood.