Power users warn EU investment stalls over climate

By Huw Jones and William Schomberg

BRUSSELS (Reuters) - Energy-intensive industries in Europe warned on Thursday that big investment decisions are being put on hold until the European Union hammers out its plan for fighting climate change after 2012.

A month after the EU's executive announced proposals to curb greenhouse gas emissions in the 27-nation bloc, executives from some of Europe's biggest companies said they could not afford to wait long for details of how the system will work.

Juha Rantanen, chief executive of Finnish stainless steel company Outokumpu, said the EU's Emissions Trading Scheme, which will make companies pay increasingly for their pollution, was already hitting his company's plans to expand mining of ferrochrome, a stainless steel ingredient.

"With not knowing what the price of electricity will be beyond 2012, or what will be the price of emissions rights, we are not making that investment and instead we buy ferrochrome from South Africa and Kazakhstan, where it's being produced in an environmentally less efficient way," he told Reuters.

"This trading scheme puts a cost into operations in Europe which is higher than for competitors in other regions. That will ultimately lead to European industry investing less in Europe."

Jean-Pierre Clamadieu, CEO of French chemicals group Rhodia , noted that French cement maker Lafarge had recently suspended its investments in plants in the EU and said Rhodia might face a similar dilemma in the near future.

"It is important we get as quickly as possible visibility on (the EU plans)," Clamadieu said. "If we don't, then I think there will be lot of investment project delay or investment which will move to different regions of the world."

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