| Steel steal |
|
|
| 07 December 2011 | |
|
Should corporate tax dodgers be allowed to benefit from public R&D subsidies? Belgian MEP Philippe Lamberts says not. "This is a red line," he says. Shareholders should not profit from publicly funded research if the company is not paying its fair share, writes Stephen Gardner. This principle is not being respected in the European Union's flagship research programme, the Seventh Framework Programme for Research and Development. Steel giant ArcelorMittal pays next to no tax in Belgium despite making huge profits in the country. Group company Arcelor Mittal Finance and Services Belgium, for example, had profits of €1.3 billion in 2009 but paid €496 in tax (that's not a typo). In 2010, profits were up to €1.4 billion but tax went down to €0. Other ArcelorMittal companies in Belgium also paid minimal tax, thanks mainly to notional interest schemes. Nevertheless, ArcelorMittal companies participate in five FP7 projects so far, which attract a total public subsidy of €14 million. ArcelorMittal is also a leading member of a European Technology Platform (ETP), the European Steel Technology Platform (ESTEP). ESTEP was established in 2004 with the objective of setting the agenda for the sector's research activities. ArcelorMittal is well represented in ESTEP: the platform's secretary general, Bertrand de Lamberterie, was, before he took up the post, technical director of ArcelorMittal Flat Carbon Europe. ArcelorMittal and ESTEP also benefit from a public research subsidy through an obscure scheme, separate from the Framework Programme, called the Research Fund for Coal and Steel (RFCS). This manages the residual assets of the European Coal and Steel Community, which was formally closed down in 2002. The RFCS has an annual budget of about €60 million, three quarters of which is doled out to steel companies. The RFCS is a closed system in which the industry, through its representation on boards and advisory groups, decides what the priorities for the fund are, then bids for the money according to those priorities. The RCFS is overseen by a 30-member advisory group. Of these, five represent universities and research organisations, two represent workers' groups, and 23 represent steelmakers. Of these, three are from ArcelorMittal companies, and one is Bertrand de Lamberterie, of ESTEP and formerly ArcelorMittal. A major aim of steel-related research, including that funded through the RCFS, is lower greenhouse gas emissions. Yet ArcelorMittal already benefits from a massive carbon-related subsidy in the form of emission allowances given to it for free under the EU Emissions Trading Scheme (ETS). Because ArcelorMittal's production nosedived during the recession in 2009, it is sitting on about 97.2 million excess allowances from the 2008-2010 period (according to environmental campaign group Sandbag), which can be held over to the next ETS phase from 2013-2020. These allowances could be sold for about €1 billion at current prices, with a likely higher price as the carbon cap tightens in the next phase of the ETS. EU Climate Action Commissioner Connie Hedegaard has defended the banking of carbon allowances by companies such as ArcelorMittal on the basis that they can use revenues realised from the sale of allowances for new technologies to reduce their emissions. Maybe so. But then why does ArcelorMittal, which in 2010 had global sales of $78 billion, and a profit of $2.9 billion, need public funds for the same purpose from FP7 and the RCFS? A version of this article was originally published by Corporate Europe Observatory. |
| < Prev | Next > |
|---|