Greenhouse Gases and Climate Change

An increased concentration of greenhouse gases in the earth’s atmosphere is argued by many experts to contribute to the phenomenon of global warming, leading to climate change.

In this context, BlueScope Steel supports the Australian Government’s aim of maintaining Australia’s greenhouse gas emissions to 108% of 1990 levels over the period 2008-2012.

BlueScope Steel believes that climate change is a serious global issue that requires a global response. Policies that only require developed countries to reduce their emissions are not likely to reduce global greenhouse gas emissions.

Growing demand for steel products is driving large increases in steel production, especially in developing countries such as China, India and Brazil. Given the growth rates of these countries, and the essential role of steel in modern economies, this demand is unlikely to slow.

Regulation of greenhouse emissions in developed countries alone would simply see more and more steel production move to the developing world. This would not cut global GHG emissions, and may actually increase greenhouse intensity if less efficient technology is used.

Measures to cut greenhouse gas emissions must be comprehensive and global, covering both developed and developing countries. Such measures must also take account of the legitimate aspiration of all countries to grow their economies.

BlueScope Steel has operations in countries that have not ratified the Kyoto Protocol, such as Australia, and countries that have ratified, such as New Zealand. The Company’s operations are affected by greenhouse gas regulations in a number of jurisdictions.

In New South Wales, the State Government’s Greenhouse Gas Abatement Scheme (NGAS) regulates emissions from the stationary energy sector, thereby increasing the cost of electricity purchased by BlueScope Steel.

The Australian Government has introduced a Mandatory Renewable Energy Target (MRET) of 9,500 GWh of electricity by 2010. This MRET scheme also has the potential to increase the cost of externally purchased electricity.

In New Zealand, the Company was undertaking a negotiated greenhouse agreement with the New Zealand Government in order to obtain an exemption from a proposed carbon tax, after that country ratified the Kyoto Protocol. However, after a strategic review of climate change policy by the New Zealand Government in 2005, the likely future GHG regulatory environment in New Zealand, as it affects our business and more generally, is currently unclear.

The Australian States & Territories are developing an emissions trading scheme; however, for such a scheme to come into effect it would require the agreement of all States & Territories or the Federal Government. The Federal Government’s current position is that it will not introduce an emissions trading scheme.

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