Norwegian Authorities Back Elkem's Emission Allowance Claims
Norwegian Authorities Support Elkem's Emission Allowance Argument
Elkem ASA has received encouraging news from the Norwegian Ministry of Climate and Environment, highlighting a favorable conclusion regarding the allocation of EU ETS free emission allowances. This situation revolves around the treatment of Norwegian manufacturers of silicon, ferrosilicon, and manganese. It appears that Norwegian producers were at a disadvantage compared to their counterparts within the European Union under the current EU Emissions Trading System (EU ETS) for the years spanning 2021 to 2025.
Reevaluation of Emission Allowances by Norwegian Environment Agency
The Ministry has forwarded the case to the Norwegian Environment Agency, which is tasked with reassessing the allocation process of emission allowances. This reevaluation aims to align Norway's practices with those employed by other EU nations, ensuring a more equitable and fair approach.
What is Carbon Leakage and Its Implications?
In the context of the EU ETS, businesses at considerable risk of carbon leakage receive free allowances in the interest of maintaining competitiveness. Carbon leakage occurs when strict climate policies may drive production away from higher regulation environments, such as Norway, to countries with less stringent requirements. This shift can increase global emissions, contradicting climate goals.
For the assessment period of 2021-2025, specific Norwegian facilities, including Elkem's five silicon manufacturing plants, received free emission allowances estimated at around 72 percent of their historical emissions. Comparatively, their EU counterparts received a more generous allocation of roughly 94 percent.
Impact of the Ministry's Support
Elkem's situation draws attention to the disparities in allowance allocations that challenge the competitive edge of Norwegian metal producers versus their EU competitors. Inge A. Grubben-Strømnes, Senior Vice President of Elkem Silicon Products, noted the importance of equal treatment in the allowances’ distribution process, emphasizing a need for balance across the industry.
Expected Additional Allowances for Elkem
Based on the details communicated by the Norwegian Ministry of Climate and Environment, Elkem anticipates an additional allocation of approximately 1.3 million free emission allowances for the 2021-2025 period. This extra support may significantly bolster Elkem's operational capacity in a highly competitive global market.
About Elkem ASA
Elkem, one of the leading providers of silicon-based materials, plays a crucial role in creating innovative, sustainable solutions. With a commitment to renewable energy and environmental sustainability, the company develops silicones, silicon products, and carbon solutions that foster advancements across various sectors. Elkem’s commitment to innovation supports numerous essential innovations, aiding in everything from electric mobility to enhancing digital communications.
In 2024, Elkem achieved a remarkable operating income of NOK 33 billion, demonstrating its robust market presence. The company, which has an experienced global team of over 7,200 employees, is dedicated to delivering sustainable growth and fulfilling the potential of its stakeholders. It may interest investors that Elkem is listed on the Oslo Stock Exchange (Ticker: ELKO), a testament to its significant stature in the industry.
Contact Information
For any inquiries or further information, please contact:
Odd-Geir Lyngstad
VP Finance & Investor Relations
Tel: +47 976 72 806
Email: odd-geir.lyngstad@elkem.com
Marianne Stigset
VP Corporate Communications & Public Affairs
Tel: +47 411 88 482
Email: marianne.stigset@elkem.com
Frequently Asked Questions
What was the conclusion drawn by the Norwegian Ministry?
The Ministry found that Norwegian silicon producers were treated unfairly in the allocation of EU ETS emissions allowances compared to EU producers.
What action will be taken by the Norwegian Environment Agency?
The agency will re-evaluate the emission allowance allocation process to ensure alignment with EU regulations.
How does carbon leakage relate to emission allowances?
Carbon leakage occurs when businesses move production to areas with less strict regulations, potentially increasing global emissions.
What additional support does Elkem expect?
Elkem anticipates around 1.3 million additional free emission allowances due to the Ministry's support.
What market position does Elkem hold?
Elkem is one of the leading providers of advanced silicon-based materials, promoting sustainable innovation and solutions.
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