Eurofer, Brussels

Current EU ETS proposal an existential threat, says European steel industry

On the day the Environment Council is due to discuss the fourth reform of the European Union Emissions Trading System (EU ETS) the European Steel Association (Eurofer) publishes its position paper setting out how the proposal can be improved. “The current proposal for the EU ETS post-2020 puts the viability of the steel industry – including its most efficient producers – at risk. This is despite the European Commission’s recognition that the steel industry is one of the small handful sectors at ‘very high risk’ of carbon leakage,” said Axel Eggert, Director General of Eurofer. Recent research shows that the proposal would cost the industry around €34 billion in direct and indirect carbon costs between 2021 and 2030, wiping out the industry’s already squeezed margins.

“This proposal presents an existential threat to the 330 000 jobs that the industry supports,” added Mr Eggert.

Eurofer has outlined a range of practical solutions in its position paper. These include:

  • 100% free allocation at the level of the top 10% best performing installations for sectors at risk of ‘carbon leakage’,

  • Realistic benchmarks based on real industry data, reflecting actual technological progress,

  • Removal of the linear reduction factor of benchmarks and the cross sectoral correction factor in order to prevent the free allocation falling below technically and economically feasible levels,

  • Compensation for indirect carbon costs on the level of best performers throughout Europe.

The solutions Eurofer has developed would better reconcile industrial competitiveness in the post-2020 EU ETS whilst also strengthening overall environmental progress.

Mr Eggert concluded, “Fundamentally, world steel demand is expected to rise between now and 2050. As a necessary product for economic activity, steel will continue to be produced globally. The question for EU policy makers is: Do they want this production to take place in Europe, or abroad?”

Eurofer, Brussels