The steel plants are exposed to fierce global competition and have been repeatedly recognized as being at a very high risk of carbon leakage. In particular, the proposal fails to secure a global level playing field. This is because even the most efficient European steel plants will experience excessive additional costs not borne by their global competitors. This uneven distribution of costs is due to the continuation of the cross sectoral correction factor, as well as the artificial reduction of the performance benchmarks.
Both of these arbitrary moves cut free emissions rights down below technically feasible levels. Finally, it does not provide the necessary legal certainty that indirect carbon costs passed through in electricity prices will be offset in all member states. Presently, 22 member states do not offset any of these unilateral EU costs.
Current situation of the European steel industry
“Employment in the European steel industry has dropped by over 20 % compared to levels in the sector before the economic crisis and EU steel demand is still 25 % below pre-crisis levels. If not adjusted and improved, the Commission’s new ETS proposal will deliver another major blow to our sector,” said Axel Eggert, Director General of EUROFER.
“We appeal to policy makers to take this threat seriously and not ignore the clear results of the impact assessments or the anticipated effects on the EU steel industry. The goal of the EU ETS is to reduce the impact of Europe’s economic activity on the climate, an objective that the European steel industry has welcomed and actively contributed to. EUROFER is, however, concerned that several elements of the revision risk the continued competitiveness of the continent’s steel industry,” added Mr Eggert.
Risk for the competitiveness
Mr Eggert added, “In its current form the proposal represents a missed opportunity to fix the fundamental flaws of the EU ETS. Despite the well-accepted importance to the economy of a competitive industrial base, the proposal is at odds with the goals of the European Commission’s Agenda on Jobs, Growth and Investment. It also fails to take into account the European Council guidelines on the importance of preventing carbon and investment leakage that were reinstated in the recently adopted text of the Market Stability Reserve.”
“The ETS is one of the most powerful levers available to EU policy makers to act on the economy. However, it has to be accompanied with a more detailed and realistic impact assessment that takes into consideration the challenges our sector faces. We believe that a tool to strengthen environmental performance should not risk European jobs and prosperity, as the current proposal does. The EU needs to stop exporting jobs and importing CO2,” concluded Mr Eggert.
Photo by Sébastien Bertrand