Metals firm to cash in under climate agreement

Alloy manufacturer Magnesium Elektron is Europe's biggest point source of the potent greenhouse gas sulphur hexafluoride (SF6). The company is now hoping to reduce emissions in order to comply with integrated pollution control (IPC) requirements - but it may also profit by greatly exceeding its climate change agreement targets.

SF6 has a global warming potential some 22,200 times greater than CO2. According to official statistics, the UK released a total of 74 tonnes of SF6 in 2001, equivalent to some 1.7 million tonnes of CO2. Magnesium alloy casting, where SF6 is used as a cover gas to prevent oxidation of alloys, accounts for some 58% of emissions.

One company, Magnesium Elektron based near Manchester, is by far the largest single source. The foundry's emissions vary with output, with 42 tonnes being released in 2000 and 24 tonnes in 2003. Seven smaller magnesium casting operations account for the balance of the sector's emissions.

Magnesium Elektron is regulated by the Environment Agency under IPC and will shortly be transferred to the new IPPC regime. In 2000, the Agency required the company to conduct a feasibility study into the replacement of SF6 with a less harmful alternative.

In response, the company tested sulphur dioxide and HFC-134a. The former was rejected because of its toxic and corrosive properties, although it is used in other magnesium casting processes. HFC-134a is non-toxic, and while it is also a greenhouse gas, its global warming potential of 1,300 is much lower than that of SF6.

After a successful trial, Magnesium Elektron now plans to switch to HFC-134a for most uses by the end of next year - a move which also offers a significant reduction in operating costs. However, it will continue to use SF6 for certain alloys, notably for the aerospace industry.

The company also considered Novec magnesium protection fluid, a fluorinated ketone recently developed by 3M which has no significant global warming potential and low toxicity. However, it did not test the product on the grounds that it was not sufficiently established in the marketplace.

Magnesium Elektron is party to the climate change agreement (CCA) for the aluminium, titanium and magnesium sector - and appears to be the only magnesium manufacturer which is a signatory. The agreement, signed in March 2001, commits the company to a steady trimming of greenhouse gas emissions by 18% between 2002 and 2010 in return for an 80% discount from the climate change levy. Its targets do not appear to take account of the potential for a step-change reduction.

Magnesium Elektron declined to discuss the details of its CCA targets for SF6 emissions, or future emission projections, on the grounds of commercial confidentiality. However, compliance manager Alan Castle said that the firm has already done "exceedingly well" and is "ahead of its target" for the current compliance period. He hoped that the company will do even better against future targets as a result of "significant" reductions in SF6. Mr Castle confirmed that the company had argued strongly for SF6 to be included within its CCA targets.

The result is that Magnesium Elektron is likely to greatly exceed future CCA targets. ENDS understands that its SF6 emissions are likely to fall by perhaps 20 tonnes in 2005 - giving it a hefty surplus of allowances for sale into the UK carbon market worth perhaps £1.5 million per year at current prices.

The UK carbon market is already grossly over-supplied. The Environment Department (DEFRA) is now reviewing CCAs with a view to toughening up the targets - but it is unclear how it will handle Magnesium Electron.

It could be argued that the reduction in SF6 emissions had already been required by the Agency under the terms of the company's IPC authorisation - and that Magnesium Elektron will benefit from a windfall.

Moreover, in October the Council of Ministers agreed an EU Regulation restricting the use of fluorinated gases (see pp 50-51 ). EU guidance for non-ferrous metals companies regulated under IPPC also says that SF6 is not the "best available technique" - and should be replaced as soon as possible.

Mr Castle accepts that SF6 is becoming subject to tighter regulatory controls. However, he suggested that any financial reward through the sale of surplus allowances would be justified because the company has "put a lot of money into R&D to reduce SF6."

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