European steel-makers have warned that efforts to decarbonise the industry are threatened by prohibitive energy prices coupled with ‘skyrocketing’ carbon prices.
The warning from the European Steel Association (Eurofer) coincides with a meeting of the European Council and ahead of the Environment Council next week. ‘Key European industries such as steel cannot bear all the energy and climate costs that we experience today and are likely to face also in the coming years if policymakers do not take the right decisions now,’ says Eurofer director general Axel Eggert.
‘The EU needs to pursue its decarbonisation target of a 55% emissions cut by 2030 through a sustainable transition that allows the industry to invest and secure a living for its workforce and the millions of households dependent on it,’ he states. ‘If the transition is not sustainable, we risk the European market being flooded by ‘dirty’ cheap steel from third countries such as China, Russia or Indonesia’.
Eurofer says energy-intensive companies already exposed to price spikes have been forced to react by reducing production or temporarily closing plants. Gas and electricity prices have been rising exponentially, it complains, registering up to fivefold increases in comparison with last year. In parallel, carbon price spikes up to EUR 80-90 are having an increasing impact on electricity prices.
‘While this unprecedented crisis in the energy markets requires additional urgent initiatives, EU leaders also need to take into account the implications of the upcoming climate legislation, in particular the Carbon Border Adjustment Mechanism (CBAM) and the revision of the EU ETS,’ Eggert adds.
A Eurofer impact assessment suggest that additional direct carbon costs for the steel industry, with the combined effect of CBAM/ETS on the free allocation phase out, will be of nearly EUR 14 billion in 2030 with ‘business as usual’ emissions. The figure will be EUR 8.4 billion if the sector is able to reduce its emissions by 30% by 2030 through the proposed investment of EUR 25 billion in clean technologies.
It is argued this means that in 2030 an average EU steel company retrofitting its plant with clean technology will face EUR 400 million carbon costs, while a similar non-EU company exporting its own steel to the EU market will bear only EUR 30 million of costs, despite the CBAM levy.
Eggert insists such a situation would be unsustainable and threatens his members’ low-carbon projects. ‘The EU steel industry should become the first industrial mover and the flagship, rather than the collateral damage of the EU climate policy.’
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