British steel maker Corus, formerly known as British Steel, is to be merged by Tata steel in a cost-cutting move that could threaten thousands of UK jobs. The move was part of the plan by Tata to cut costs in the UK by 350 million pounds ($521 million) following the Indian industrial giant's acquisition of Corus, which was agreed in 2006. The proposed merger next year would result in the creation of world's second biggest steel maker after ArcelorMittal. The plan could cause plant closures and job losses across the UK at a time when Corus and unions are trying to prevent redundancies by discussing potential pay cuts of up to 10 percent for the firm's 25,000 workers. Meanwhile, Philippe Varin, the chief executive of Corus, is threatening to shift the steelmaker's European operations to China unless the regulations governing carbon emissions are overhauled. Philippe Varin stated, "If we are forced to buy CO2 credits on the market without a system to improve our production process, then we will not produce steel in Europe."

Mr Varin, who is also the chairman of the World Steel Association's Climate Change Policy Group, said, "To cut carbon emissions of steel production, we need breakthrough technology, but this is extremely expensive, costing _200m to _300m to upgrade a one million ton production plant." Steelmakers also want emissions reduction credits for deploying new technologies such as carbon capture and storage, which is currently excluded from the Carbon Development Mechanism. The steel industry, which accounts for 4 per cent of global emissions, was seeking to replace current carbon abatement schemes established under the 1997 Kyoto Protocol, with a 'sectorial agreement'. Such a system would give manufacturers free carbon allowances up to an industry-set benchmark and encourage technology transfer between East and West.

Mr Varin's suggestion of a sectorial agreement process for carbon credits was criticised by the environmental campaigners.