ANNOUNCEMENT 01 May 2019
In May 2019, the UK government announced approving a loan to British Steel to cover the company's cost of emission allowances necessary fulfil its obligations under the EU's Emissions Trading Scheme (ETS).
NUMBER OF INTERVENTIONS
Oral statement to the UK Parliament, British Steel: EU Emissions Trading Scheme (EU ETS) update, Details of a commercial agreement that the government has entered into with British Steel, relating to their environmental obligations under the EU ETS., issued on 1 May 2019: https://www.gov.uk/government/speeches/british-steel-eu-emissions-trading-scheme-eu-ets-update
Oral statement to UK Parliament, British Steel compulsory liquidation, Statement on British Steel by Business Secretary Greg Clark, issued on 22 May 2019: https://www.gov.uk/government/speeches/british-steel-compulsory-liquidation
British Steel: https://britishsteel.co.uk/what-we-do/
On 1 May 2019, the Department for Business, Energy & Industrial Strategy announced the approval of a bridge facility to British steel having a seven per cent interest rate. The financing will cover the company's cost of emission allowances needed to fulfil its obligations under the EU's Emissions Trading Scheme (ETS). The financing has a total value of GBP 120 million (approx. USD 156.6 million).
More specifically, the government has purchased the necessary emission allowances on behalf of British steel. In turn, under a "deed of forfeiture", British steel will transfer its 2019 allowance to the government. The Department for Business, Energy & Industrial Strategy noted that: "Through the subsequent sale of these 2019 allowances, we expect the taxpayer to be repaid in full."
In this context, the Secretary of State for Business, Energy and Industrial Strategy Greg Clark stated in a speech given to the House: "I can confirm to the House that following the purchase of the necessary allowances, British Steel have been able to comply with their 2018 EU ETS obligations in full."
Notably, on 22 May 2019, the UK court approved an application to enter an insolvency process submitted by British Steel. In this context, the Secretary of State for Business, Energy and Industrial Strategy Greg Clark stated in a speech given to the House that: "The government provided the facility to purchase allowances worth £120 million against the security of 2019 ETS allowances which are currently suspended pending ratification of the Withdrawal Agreement. Without this facility, British Steel would have faced a financial pressure of over £600 million – the ETS liability plus a £500 million fine. This would not only have placed British Steel into an insolvent financial position, but the charge, attached to its operational assets, would have been likely to prevent any new owner from acquiring these assets in the future. This transaction demonstrated the government’s continuing willingness to work closely with all parties to secure the long term success of this important business."
British Steel has its headquarters in the United Kingdom with sales offices across Europe as well as in Singapore, Chinese Taipei, Turkey and the United States. The company is a producer of various steel products serving a number of industries including the rail, automotive and construction industries.