Corus CEO Philippe Varin, who is also the chairman of the World Steel Association's climate change policy group has threatened to shift operations to China if the EU does not change its carbon emission regulations.

Speaking at the UN climate change conference in Poznan, last week, Varin said that politicians in Europe have to help companies by funding them to install latest breakthrough clean-energy technologies or Corus will have to shift its operations from Europe to China where steel manufacturers are not subject to stringent carbon caps.

The steel industry wants the current 1997 Kyoto Protocol agreement on carbon reducement to be scrapped and replaced, with a 'sectoral agreement' wherein steel manufacturers are given free carbon allowances laid down with an industry-set benchmark, which makes technology transfer between the East and West simpler.

Varin said, if Corus is forced to buy CO2 credits from the market without a system being put in place to improve the production process, then the company has no choice but to shift its operations out of Europe even as EU leaders agreed to reduce greenhouse gas emissions by 20 per cent by the year 2020.

According to him, in order to cut carbon emissions while producing steel, companies require breakthrough technology, which is very expensive, costing €200 million to €300 million to upgrade just a one million ton production plant.

Varin said that steel manufacturers could not afford to spend these huge amounts of money on new technology or pay penalties for not abiding with CO2 emission laws, which will force them to quit Europe and relocating their plants elsewhere thereby polluting the planet by twice as much.

He added that the profits of steel manufactures will nosedive and also put them under great disadvantage with other steel manufacturers whose plants are based outside of the CO2 control regime.

Varin said since Corus's customers require steel, they would then be importing it from China or some other developing country and the cost of shipping would be higher not to mention the higher amount of pollution as plants in China and developing countries have outdated machinery which are less efficient and release twice as much CO2 emissions compared to the present plants in Europe.

He said that steelmakers should be given carbon emissions reduction credits if they install new technology to for carbon capture and storage, which is at the present moment not included in the CO2 policy.

Corus issued a statement late Sunday saying "It is not the case that European carbon regulations are leading Corus to consider physically transferring any of its European production plants assets to locations outside Europe."

Meanwhile, the union at Corus in the UK has reacted in disbelief to its Chief Executive statement of threatening to pull out the company's operations out of Europe as the company employs about 25,000 workers in the UK.

The union's secretary has said that if Corus pulls out of Europe then it will have a devastating impact on the country and wanted the management to sit with the workers and discuss this issue although he did mention that the company may be putting pressure on the government to bail it out.