European Green Deal could make EU steel industry the flagship for climate policy, says Eggert

The European Green Deal, announced this week by the European Commission has been welcomed by the European Steel Association (EUROFER).

Axel Eggert, EUROFER’s director general, claims that he welcomes the aims of the initiative. “It is clear [that] policymakers take seriously the need to transition to a carbon-neutral future with industry rather than without it,” he said, adding that it was now important 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,” Eggert added, insisting that policymakers must establish how ‘green steel’ can compete against carbon-intense, low-cost steel imports with a higher CO2 footprint than steel products in Europe.

Eggert praised the European Commission’s ‘high ambition’ of making Europe the first carbon-neutral continent by 2050 and said that the steel industry was already working on a range of low and carbon-neutral solutions that could lead to emissions reductions of up to 95% in 30 years from now under an ‘optimum regulatory framework’.

For Eggert, a ‘partnership on clean steel’ is essential. He argued that policymakers must ensure a market exists for green steel, which may cost considerably more (35-100% more) than conventional carbon steel.

“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,” he said.

A functional carbon border adjustment mechanism is part of the European Commission’s Green Deal and is something EUROFER has advocated, arguing that there must be an incentive for foreign producers to reduce emissions. At present, third country producers have little incentive to follow the carbon reduction path that EU producers are already on.

Eggert believes the border adjustment must be implemented immediately because EU steelmakers are already disadvantaged competitively when compared with third countries. “A regulatory framework that builds on the carbon footprint through the value chain must be established,” Eggert said, adding that, as a transitional measure, a carbon border adjustment would support EU producers’ CO2 reduction efforts while incentivising trade partners to do the same.

EUROFER wants the Green Deal to work and claims it is ready to work with policymakers to make it happen and offer recommendations and solutions ‘to help make the Green Deal work for all of European industry and society’, according to 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,” Eggert concluded.

John Bolton, CEO, Liberty Steel Continental Europe, commented: “The successful delivery of Liberty Steel Group’s strategy to be net carbon neutral by 2030 and the development of a sustainable European steel industry will require significant investment as well as sustained, consistent support from Governments across the EU. The Green Deal has the potential to create the right framework to support this transformation.

We also welcome the Commission’s proposal for a carbon border adjustment mechanism as, combined with existing tools such as free allocations, it will help European producers who are operating at a huge commercial disadvantage to those which are able to import low-cost steel without any respect for European climate policies. We will review the more detailed proposals with interest when they are available.

We look forward to working with the European Commission and others to deliver the Green Deal.”

Geert Van Poelvoorde, CEO ArcelorMittal Europe – Flat Products, commented: “The Green Deal will only work if there is full-scale transformation and support for industries.”

“The climate challenge is unprecedented, and bold action is therefore needed. Achieving our ambition of being carbon neutral by 2050 is a major challenge, but with the right political framework - allowing European steelmakers to remain competitive while the steel industry moves to carbon-neutral steelmaking – we’re convinced it’s achievable. The proposal for a carbon border adjustment, which effectively puts a carbon price on imports, recognises that every country needs to play its part in reducing global CO2 emissions. By preventing steel production moving to countries where carbon emissions legislation is less strict, and where carbon emissions are therefore higher, means we put a stop to carbon leakage. This is exactly the type of action that is needed.”

While support for a carbon border adjustment has been growing in recent months, ArcelorMittal claims it was one of the first companies to support a proposed carbon border adjustment and backs the European Commission’s proposals for a €35 billion ‘just transition’ fund, to invest in research, innovation and green technology.