Aluminum Industry Hurt by EU Climate Rules, Study Shows
European Union regulation, including carbon and renewable-energy policies, reduced the profitability of the bloc’s aluminum smelters, according to a study by the Centre for European Policy Studies.
The expenses associated with meeting European laws accounted for an average of 8 percent of total production costs for the industry over the 2002-2012 period, CEPS said in the analysis, published today in Brussels. The price of power, boosted by costs linked to carbon emissions passed on by utilities, and surcharges to support renewable energy imposed a significant burden on the industry, according to the study.
“The analysis of cost differentials with the least cost producers — primary aluminum smelters in the Middle East — shows that EU regulatory costs represented about one-third of this competitive gap in 2012,” according to the study, prepared for the EU as a part of its fitness check on the aluminum industry.
European requirements affected the profitability of the industry not only in time of crisis but also in boom years, according to CEPS.