The current EU energy and climate policy threatenes the steel industry in Germany and could cost it an additional €1.5bn/y. This applies not only to steel, but to the entire value chain as price rises are passed on to customers.
The European Commission has set emission benchmarks for 2013 that are10% lower than the emissions of the most efficient plants in the EU and are not technically feasible. These present a massive problem of competition from companies from other regions of the world not required to meet such benchmarks, said Hans Jürgen Kerkhoff President of the German steel institute (VDEh).
The Emissions Trading Scheme (ETS) was established in the EU with the aim of providing a global instrument for climate protection worldwide. In the past year, the European Commission has not succeeded in getting a global agreement and thus, locations outside of Europe have two clear advantages over the steel companies within the EU: lower energy costs combined with no or low charges for CO2 emissions.
More puzzling in this context are political attempts to reduce the number of cap and trade certificates available, and thus drive the price up.
Certificates not yet consumed as a result of the economic crisis of 2008/09 because of the marked decline in production, would be ‘set aside’ and removed from trading. But it is a misconception that there is an abundance of certificates that should be eliminated, said Jürgen Kerkhoff. The current low price of trading certificates is just a snapshot. With the significant shortage of free allocation planned in the third trading period starting in 2013 the price will rise dramatically in future years. An additional artificial shortage would worsen this effect. Ultimately to set aside the certificates not used between 2008 and 2010 which amount to around 50Mt of CO2 to trade, would be a means of the EU further aggravating the situation ‘through the back door’ – and without any condition of an international agreement being met.