The European Commission has formally announced its European Green Deal for the European Union. The European Steel Association (EUROFER) welcomes ambition behind the package and notes the inclusion of sections on supporting zero-carbon steelmaking processes and on carbon border adjustment.
“We welcome the aims of the European Green Deal. In charting a series of sectoral and specific policy plans, it is clear policymakers take seriously the need to transition to a carbon-neutral future with industry, rather than without it”, said Axel Eggert, Director General of EUROFER.
“It is now of utmost importance to develop a regulatory framework that creates markets for CO2-neutral products: these have significantly higher production costs, for example because of the use of highly-priced hydrogen instead of coking coal in the steelmaking process”, added Mr Eggert. “Policymakers must establish – _jointly with us – _how ‘green’ _steel can compete against carbon-intense, low-cost steel imports that have a significantly higher CO2 footprint than EU-made steel”.
“The EU seeks to make Europe the first carbon-neutral continent by 2050, which is a high ambition. The steel industry is already working on a range of low- and carbon-neutral solutions that could lead to reductions in CO2 emissions from steelmaking by up to 95% in 2050 under an optimum regulatory framework”, added Mr Eggert. “It is why a partnership on clean steel – _as well as other means to ensure the steel industry remains competitive even as it becomes carbon-lean – is so essential”.
The European steel industry directly employs 330,000 people, with a further 2.4 million indirectly relying on the sector. The transition to carbon-lean steelmaking will need 400 TWh of electricity, of which 5.5 million tonnes for the production of hydrogen. EU policymakers must ensure a market exists for this ‘green’ steel, which may cost 35-100% more to produce than it does with the highly optimised processes currently in use.
“The European steel industry supports the overall aims, but reminds policymakers that the investment and regulatory requirements will be massive,” emphasised Mr Eggert. “If Europe decarbonises by sacrificing European industry – _thereby exporting our CO2 emissions to other regions – _then that will not count as a victory but rather a defeat in the struggle against global climate change”.
EUROFER has advocated for a functional carbon border adjustment mechanism, which features in the Green Deal. This must serve as an incentive for foreign producers to reduce their emissions. Currently, third country producers have little incentive to follow the carbon reduction path that EU producers are already on.
“The border adjustment must be implemented as soon as possible as a transitional addition to existing tools, such as free allocation. This is because EU steelmakers already have a competitive disadvantage compared to third country producers, even with free allocation as it is today”, said Mr Eggert. “A regulatory framework that builds on the carbon footprint through the value chain must be established. As a transitional measure, a carbon border adjustment would support EU producers’ CO2 reduction efforts whilst incentivising trade partners to do the same”.
“The EU’s steel industry will be following this dossier very closely, and stand ready to work with policymakers to offer recommendations and solutions to help make the Green Deal work for all of European industry and society”, concluded Mr Eggert. “If the right conditions are in place as a result of the Green Deal, the EU steel industry could become the flagship for climate policy – _able to roll out the first industrial-scale demonstrators of its low-carbon technologies by as early as 2025.”