Over the previous two years, EU steel companies surrendered at least 660,000 carbon credits for compliance in the bloc’s cap-and-trade scheme generated from projects at steelmakers in China and India, according to EU data identified by campaign group Sandbag. This undermines the EU steelmakers’ claims that costs they face under the EU emissions trading scheme (ETS) leave them more vulnerable to foreign competition, Sandbag said.

...

Unlike power generators, industrial firms covered by the ETS employ few specialists to trade their carbon instruments and often hire financial intermediaries to help manage their compliance strategy. Such arrangements commonly result in trading in the secondary market, where risk-free CERs are bought and sold at the same price regardless of their project type or origin.
“In this situation, it is not realistic to expect companies to be able to have an influence in where each CER is coming from,” said Stefan Kleeberg of First Climate, a carbon asset management firm.
Another strategy often employed by industrial ETS participants is for them to invest in specialist funds that use the cash to buy up CDM projects in the primary market.
“For some industrial companies, they might actually be more interested in investing in primary CDM projects from their own sector because they will have a much better understanding of what the projects are doing.”

...


The full article is available here (pp 5-6):