A new regulatory regime for dispensing around 100 billion euros of carbon permits has been approved by EU regulators, granting steelmakers and oil refineries free emission allowances in an effort to shield them from international competition after 2012.

Fears that tighter controls on CO2 emissions in Europe will drive factories to relocate abroad has led the EU to grant sweeping exemptions for industries deemed to be at risk.

Existing proposals for the permits to be allocated according to carbon intensity “benchmarks” were approved with only slight modifications by the European Commission on 15 December.