Europe’s leading steelmakers have called on European policymakers to stop Emissions Trading System (ETS) cost escalation until companies have solid business cases for transformation investments.
The European Commission is due to present its eagerly awaited ETS review in July, Kallanish notes.
In a letter addressed to European Council President António Costa and European Commission President Ursula von der Leyen, the firms, including ArcelorMittal, thyssenkrupp, voestalpine, Moravia Steel and Vitkovice Steel, demand “decisive intervention” to arrest ETS costs. This includes recalibration of ETS free allocations, benchmark methodologies and values, CBAM factor and the Cross-Sectoral Correction Factor (CSCF).
“Further conditionalities to free allocation as currently discussed must be avoided as this would weaken the intended carbon-leakage prevention,” the firms say.
This intervention must allow firms to build solid business cases for transformation investments, supported by “comprehensive and reliable policies” to incentivise the uptake of low-carbon and circular products, they add. ETS revenues should also be “channelled into accessible, technology-neutral industrial transformation support linked to verified emissions reductions.”
“The ETS no longer reflects current global realities. Europe is effectively acting alone in imposing rapidly rising carbon costs on its industry,” the letter asserts. Meanwhile, the conditions required for industrial transformation are not in place, with critical infrastructure for energy, CO2, hydrogen and CCS missing or insufficient. Investment frameworks are unreliable, and customer demand and willingness to pay for low-carbon products are low, the signatories note.
CBAM remains untested and leaves downstream industries exposed, they add.
“If current policies continue, rising carbon costs will be passed on value chains, triggering downstream carbon leakage, compressing margins, scaling back production and accelerating plant closures. The consequences – job losses, reduced investment, and weakening economic growth – are foreseeable,” the letter reads.
“Time is running out. Decisive and immediate policy correction is required to preserve Europe’s industrial foundation and enable a credible path to transformation,” it concludes.
