Companies made €14bn profit on pollution: report

European steel, petrochemicals companies and refineries made €14bn profit on the pollution rights they were given by governments between 2005 and 2008, according to research by CE Delft for the European Climate Foundation.

Firms made a profit on their CO2 rights by passing the market price to consumers and other third parties, even though they were free, the Dutch research group says. Companies based their calcuations on what the pollution rights – known as carbon credits – would have cost on the open market.
The system of issuing pollution rights is supposed to encourage firms to reduce pollution. Companies which produce more CO2 than the rights entitle them to can be fined for the excess. Those which use less, can sell their ‘rights to pollute’ to another company via a trading system.
‘This study indicates that free allocation merely shifts income from consumers to companies without helping the competitive position of companies nor the environment,’ the institute’s Sander de Bruyn said in a statement.
Companies are given the pollution rights free of charge because of fears that making them pay would lead to unfair competition. The US, for example, does not have a similar system.