Europe’s steel industry has welcomed improvements made by EU ministers to proposed reforms of the Carbon Border Adjustment Mechanism (CBAM), while warning that loopholes in the policy threaten Europe’s climate goals and industrial competitiveness.
The Economic and Financial Affairs Council, comprising the economy and finance ministers of the EU27, has adopted its position on the European Commission’s CBAM review proposal, including stronger references to ‘melt and pour’ rules and clearer recognition of the risk that non-European producers could circumvent the system through ‘resource shuffling’ practices.
Scrap as precursor
The latter happens when foreign producers direct lower-carbon steel to Europe while continuing to sell more carbon-intensive products elsewhere. The European Steel Association (Eurofer) has welcomed the change but warns the EU is still relying largely on uncertain corrective measures rather than preventing the practice from occurring.
The association also criticised the decision by Member States to retain the Commission’s proposal to include pre-consumer steel scrap as a CBAM precursor without first conducting a dedicated impact assessment. Eurofer warned the measure could have unintended consequences for scrap markets and Europe’s circular economy.
The Council also proposed extending CBAM coverage to around 200 additional products containing steel. Eurofer welcomed the move but said it failed to provide comprehensive and structural coverage for many steel-intensive goods, leaving parts of Europe’s manufacturing value chain exposed to imports that do not face equivalent carbon costs.
More needed
Eurofer dg Axel Eggert said the reforms did not go far enough.‘The Council has taken a step in the right direction but it will not be sufficient to prevent carbon leakage as major loopholes remain on circumvention, downstream products and exports. If they are not closed, carbon emissions will shift, not fall.’
The steel industry also expressed concern over the lack of progress on a long-term solution for European exports. While CBAM applies to imports entering the EU market, exporting European steelmakers face carbon costs that many international competitors do not.
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