Continued prohibitively-high energy prices, coupled with “skyrocketing” carbon prices of above Eur80/mt ($90.67/mt), risk derailing the European Union’s steel industry’s ambitious decarbonisation plans, the head of European steelmakers’ association Eurofer said Dec. 16.
In a lobbying statement issued ahead of next week’s European Environmental Council meeting, Eurofer Director General Axel Eggert warned he was urging EU leaders to “act swiftly and ensure climate goals are met cost effectively, while preserving the viability of strategic industrial sectors.”
Cheap and un-decarbonized, or “dirty,” imports from China, Russia or Indonesia continue a potential threat to the regional steel sector, Eggert said.
EU ministers will meet in Brussels Dec. 20 to hear a progress report on the EU’s “Fit for 55” climate package, to review the EU Emissions Trading System allowances and discuss battery recycling in the interests of achieving an orderly energy transition.
“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,” Eggert wrote. “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.”
Steelmakers including ArcelorMittal Europe and Liberty Steel and British Steel in the UK have recently reduced their production hours or charged energy surcharges on long steel products to combat high electricity and gas prices. According to Eurofer, prices for these inputs have this year risen four to five-fold from 2020 levels.
Carbon prices under the EU ETS have gained 164% since the start of 2021, hitting a fresh record high of Eur90.75/mt CO2e on Dec. 8.
EU leaders need to take into account the implications of the upcoming Carbon Border Adjustment Mechanism (CBAM) and the revision of the EU ETS, Eggert argued.
According to Eurofer’s impact assessment, the 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 Eur14 billion in 2030 with business as usual emissions, or Eur8.4 billion euros if the sector is able to reduce its emissions by 30% by 2030 through a proposed Eur25 billion investments in clean technologies.
In practice, this means that in 2030 an average EU steel company retrofitting its plant with clean technology will face Eur400 million carbon costs, while a similar non-EU company exporting its “dirty” steel into the EU market will bear only Eur30 million euros of costs, despite the CBAM levy at the border, Eurofer calculates.
— Diana Kinch