Norsk Hydro: CO2 Cost In Aluminum Indus Substantial In Europe

OSLO, Sep 25, 2008 (Dow Jones Commodities News Select via Comtex) -- Norsk Hydro ASA (NHY.OS) executives Thursday said the cost of carbon dioxide in Europe for aluminum producers "has been substantial," reducing their competitiveness on a cost basis with producers in other regions. Speaking at the company's capital markets day in Oslo, Hydro Chief Financial Officer John Ottestad said: "There's an uneven playing field in the way carbon dioxide is factored into aluminum smelting prices" in different regions. He noted the higher cost of CO2 for European companies could see a situation where more environmentally-friendly aluminum production plants close because they aren't cost efficient to European operators like Hydro who pay carbon costs, whilst less efficient plants elsewhere continue to open to cater for demand. Europe has a carbon emissions trading system to penalize companies that emit CO2. That affects aluminum producers because there are direct emissions from the smelting process, and indirect emissions from some of the power generation needed to produce aluminum. Hydro Vice President Arvid Moss noted there have been discussions over compensation for affected European companies from 2013, as will be introduced in Australia, and said Hydro has spent time looking at options for a global CO2 trading scheme which would incorporate all aluminum producers. The company doesn't propose a return to free CO2 emissions, but seeks to level out the related cost disparity between companies operating in different countries.