LKAB secures more free emissions allowances

On 4 April 2024, the European Commission’s revised benchmark regulation for the trading period 2026-2030 was published. The amendments include the widening of the sintered ore benchmark to an agglomerated ore benchmark, which means that sinter and pellets will have the right to the same number of free allowances in relation to production volume. This entails an increase of approximately six million free allowances for LKAB, to an approximate value of SEK 4 billion, and a significant reduction in the number of free allowances awarded to less climate-efficient sinter production within the EU.

The current sintered ore benchmark was adopted in conjunction with the 2013 reform of the EU’s emissions trading system (ETS). Since 2016, LKAB has been working to ensure a technology-neutral application of the benchmark. As part of this, LKAB has been engaged in a dialogue with relevant stakeholders on the amendment to the benchmark regulation and has also appealed a 2021 allocation decision to the EU courts in Luxemburg. With the new benchmark regulation, the Union legislator has confirmed LKAB’s views for the coming trading period.

The amendment means that the economic incentives for CO2 emissions reductions in European steelmaking are significantly bolstered. A transition from sinter to pellets holds the potential to reduce emissions at this step by up to 90%.

Mannheimer Swartling has assisted LKAB on the benchmark reform.


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