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EU proposals on Emissions Trading and Carbon Border Adjustment derail the green transition

Date

01 Jun 2022

Sections

Climate & Environment

Open letter by the CEOs of the EU steel industry to the European Parliament and the Member States

The European steel industry is a strategic sector for the EU’s green transition, economic resilience and independence. We have clear plans and concrete projects to reduce our sector’s CO2 emissions by at least 55 percent by 2030 and to achieve climate-neutral steel production in the European Union by 2050. These commitments represent a truly industrial revolution that requires a massive €30 billion capital investment in breakthrough technologies over the coming eight years and a significant increase in operational costs stemming from the use of decarbonized electricity and hydrogen.

However, European legislators are now considering proposals on the EU’s Emissions Trading System (ETS) and the Carbon Border Adjustment Mechanism (CBAM) that undermine our capacity to invest in these projects and derail the transition to green steel production in Europe.

The proposals weaken carbon leakage protection of our industry in the domestic and global markets, favouring international competitors which are not subject to equivalent carbon costs. In Europe, new allocation rules will suddenly reduce the main CO2 benchmark by around 40 percent – because of one plant that was previously not in the scope – and set a value which no company can achieve in just three years. This is due to a premature transition from the free allocation and indirect cost compensation system to a CBAM which has not yet been tested. Circumvention and resource shuffling are only a few of the many risks that could undermine the CBAM’s effectiveness. Moreover, the CBAM does not yet foresee any measure to preserve the EU’s 20 million tonnes of steel exports per year, worth €45 billion, and the 30,000 jobs that are directly dependent on these.     

The proposals also remove massive allowances from the market, further driving the carbon and electricity price in Europe at a time when businesses and households are struggling with skyrocketing energy costs and inflation. Finally, they fail to capture the much higher carbon footprint of stainless steel imports derived from the embedded alloying elements.

We call on the European Parliament and Council to immediately address these concerns and in particular to:

  • Avoid further scaling back existing carbon leakage protection until the CBAM has proven its effectiveness and a solution for exports is in place;    
  • Prevent a sharp decrease in free allocation for existing steel plants which would result from a modification of the benchmark scope. Instead, low carbon technologies must be rewarded without reducing prematurely benchmark values, at least in the first years when such technologies are introduced at an industrial scale.

The aforementioned changes to the ETS and CBAM will allow us to make the green steel transformation happen now within the EU. Our investments will greatly benefit climate protection, the EU’s industrial competitiveness, and hundreds of thousands of jobs across the EU.

Geert Van Poelvoorde, CEO, ArcelorMittal Europe

Bernhard Osburg, CEO, thyssenkrupp Steel Europe AG

Henrik Adam, Chairman of the Board, Tata Steel Netherlands Holding

Francesc Rubiralta Rubio, Chairman and CEO, CELSA Group

Olavi Huhtala, CEO, SSAB Europe

Mario Caldonazzo, CEO, Arvedi

Hubert Zajicek, CEO, voestalpine Steel Division

Lorenzo Riva, CEO, Riva Group 

Gunnar Groebler, CEO, Salzgitter AG

Timoteo Di Maulo, CEO, Aperam

Karl-Ulrich Köhler, Chairman of the Board, SHS-Stahl-Holding-Saar Gmbh &Co

Ajay Aggarwal, Executive President Europe, Liberty Steel Group

Heikki Malinen, President and CEO, Outokumpu Oyj

Jan Czudek, CEO, Třinecké železárny

José Enrique Freire Arteta, President, Megasa

James E. Bruno, President, US Steel Košice                  

Hans Jürgen Kerkhoff, President, Wirtschaftsvereinigung Stahl

Bernardo Velázquez Herreros, President, UNESID – Spanish Steel Association   

Zlatislav Ivkov, General Manager, Stomana Industry S.A.

Markus Ritter, CEO, Marienhütte Stahl & Walzwerk GmbH

George Michos, CEO, Sidenor Group

Vasileios Goumas, CEO, Hellenic Halyvourgia   

Markus Menges and Florian Glück, Managing Directors, Badische Stahlwerke GmbH

Roberto Re, CEO, Metinvest Europe

Radek Strouhal, CEO, Vítkovice Steel

Giuseppe Pasini, President, Feralpi Group

Claudio Riva, President, Riva Acciaio

Alessandro Banzato, CEO, Acciaierie Venete

Antonio Marcegaglia, President and CEO, Marcegaglia Steel

Giuseppe Lucchini, President, Lucchini Rs

Michele Della Briotta, President Europe, Tenaris

Klaus Enwald, CEO, Ovako Imatra Oy Ab

Alexander Becker, CEO, GMH Gruppe

José Jainaga, CEO, Sidenor Aceros Especiales

Carlos Alvarez, CEO, Aceros Inoxidables OLARRA, S.A.

Aleš Falatov, Marketing and Business Development Director, SIJ d.d.

Francisco Irazusta, Executive Chairman, Tubos Reunidos SA

Nicos Georgakellos, President, ENXE – Hellenic Steelmakers Union

Ionel Bors, President, UniRomSider – Romanian Steel Producers’ Union

Stefan Dzienniak, President of the board, HIPH – Polish Steel Association

Roman Stiftner, Managing Director, Austrian Mining and Steel Association

Ivan Jurkošek, General Manager, Štore Steel    

Annika Roos, Managing Director, Jernkontoret  

Kimmo Järvinen, Managing Director, Metallinjalostajat

Philippe Coigné, Director General, Groupement de la Sidérurgie

Bruno Jacquemin, Délégué Général, A3M            

Daniel Urban, Chairman, Ocelářská unie

Anton Petrov, Chairman of the Board, Bulgarian Association of the Metallurgical Industry

Ianc Petru, Executive Manager, UNITUB – General Union of Romanian Tubes Producers

Michel Tellier, CEO, Reinosa Forgings & Castings

Timo Rautalahti, CEO, Boliden Harjavalta

Alexis Van Maercke, Secretary General, APEAL

Klaus Peters, Secretary General, ESTEP – European Steel Technology Platform

Axel Eggert, Director General, The European Steel Association (EUROFER)

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