Tata Steel offers to spend millions to cut emissions

In a meeting at the economic affairs ministry in The Hague late last year, Tata Steel’s Dutch chief Theo Henrar pledged he would spend hundreds of millions of euros to cut factory emissions - on condition the government invested a similar amount.

The proposal from the industrial giant, which has not been made public, comes against the backdrop of global wrangling between governments and corporations over who should foot the bill to ensure countries meet tough climate targets.

It is an example of how big companies in the Netherlands and beyond are putting forward their own plans to reduce emissions as they look to ward off the carbon taxes they fear will hammer their businesses, or at least see them softened.

Tata Steel, the largest corporate polluter in the Netherlands, proposed that it would build a 500-million-euro ($560 million) energy-efficient alternative to its blast furnace at its plant near Amsterdam using newly developed technology, Henrar told Reuters.

For the investment to be most effective, however, he said the government would also need to invest hundreds of millions in infrastructure, to create a carbon capture site under the North Sea that could trap and store CO2 emitted by the plant. Tata said high-ranking officials at the ministry responded positively to its proposals but made no commitments.

Paul van der Zanden, spokesman for the economic affairs ministry, which includes climate policy, declined to comment on Tata’s proposals. But he said a national corporate carbon emissions tax was needed to make sure industrial companies delivered reductions.

The government will in June outline its strategy for switching the country - among the most polluting in the European Union - to more sustainable sources of energy.

A key part of the strategy will be laying out who will pay for the estimated costs of 1.5 to 3 billion euros per year until 2050, for measures such as insulating buildings, promoting electric vehicles and increasing the supply of sustainable energy, including building offshore wind farms.

A growing number of politicians and voters favour a tough carbon tax on polluting companies.

A similar social and political debate is taking place in countries around the world which are also moving towards carbon taxes as pressure intensifies on them to sharply cut CO2 emissions to comply with the 2015 Paris climate accord.

Those that have already introduced such levies, of varying breadth and stringency, include South Africa, Canada and Norway, while the likes of Germany and several US states are considering such measures.

Many industrial companies say the taxes damage a country’s competitiveness and are putting forward proposals for what they view as more sustainable solutions.

In the Netherlands, it is not just Tata Steel. In a separate proposal, Tata, Dow Chemical, another of the biggest polluters, and fellow steelmaker ArcelorMittal have together pitched a 1.3-billion-euro project to the government that would see Dow using gases from steel factories in its chemical plants to make plastics, reducing its need for fossil fuels.

The companies are willing to invest heavily in the project, Henrar said, but they want the state to subsidise initial loss-making phases. The economy ministry declined to comment.

In recent examples of companies taking the initiative elsewhere in the world, Italian energy group Eni said this year it would expand its renewable capacity and invest in planting forests to cut its net carbon emissions to zero by 2030.

Negotiations between Dutch authorities, businesses and public interest groups on the country’s energy transition have dragged on for a year, deadlocked on the question of who should foot the bill.

So far, the public has borne the brunt via a rapidly rising surcharge on energy bills, which by next year will have tripled since 2017 to an average of 64 euros per household per year.

With Prime Minister Mark Rutte’s pro-business VVD party in power, discussions were headed toward an outcome that favoured corporates. But last month, in the face of opposition from voters and climate experts, the government said it would introduce a national corporate CO2 tax on top of the European Trading System (ETS), which penalises high polluters across the EU.

However, there has been no indication about the level of the taxes, if there will be an emissions threshold to target only the largest polluters, and whether there will separately be subsidies for investment in cleaner technology.

The Netherlands is home to many large industries, Europe’s main seaport and an abundant supply of cheap natural gas. As a result, less than 7 per cent of all energy used came from sustainable sources in 2017, compared to 15 per cent in Germany and over half of all energy in Sweden.

Reuters