Carbon tax on EU steel imports raises questions

A carbon tax on imports into the European Union as proposed by European steelmakers is understandable but would eventually be unfair for steel consumers, says Andreas Schneider of Stahlmarkt Consult.

At Eurofer’s ‘European Steel Day’ it was suggested that steel imported into the EU ought to be subject to the same CO₂ costs as paid by European mills under the Emissions Trading Scheme (ETS).  Such an approach makes no sense because it does not essentially support climate-friendly steel production, but defends a certain cost position, Schneider argues.

He criticises the EU steel industry for promoting the image that EU-made steel is in principle clean, whereas imported steel is not. However, many overseas mills are very modern and able to produce steel with emissions as low as the best-of-class in Europe, Kallanish notes.

“The question is how and by whom the real additional costs are to be determined neutrally,” Schneider asks. The costs depend on factors such as the specific CO₂ emissions per tonne of steel, the mill of origin, the production volume and the CO₂ price. This means that a large margin between individual plants is just as pre-programmed as strong fluctuations over time. “Should even the ‘dirtiest’ EU plants benefit from an import duty?” he wonders.

Across-the board taxation would mean a flat discrimination of foreign vendors, Schneider finds. He notes that it is not necessarily politically-wise for the EU to impose its own climate targets on the rest of the world. Also, such a move would add fuel to the growing trend of erecting trade barriers. This would be especially harmful to the export-intensive industries in Germany, he cautions.