ArcelorMittal, the world’s biggest steelmaker, has called upon Europe to introduce a green border adjustment whereby steel imported into Europe has the same standards applied on C02 as European-produced steel produced under the Emissions Trading System (ETS).
According to ArcelorMittal, the adjustment would call for any shortfall in C02 emissions to be compensated by the importer. “The green border adjustment would incentivise effective reduction in carbon emissions and prevent the competitiveness of the European steel industry being eroded,” claims the company.
The crux of the matter is that European steel producers will incur additional costs under Phase 4 of the ETS that companies producing in other regions of the world and exporting into Europe are not obliged to pay.
One third of all the steel traded globally is consumed in a different country to where it was produced. Imports into Europe have increased in recent years as a result of global overcapacity with imports from countries without comparable climate policies in 2018 standing at approximately 26Mt on an annualised basis.
At ArcelorMittal’s annual media day in Paris recently, Aditya Mittal, president and CFO of the company commented: “The introduction of a green border adjustment is critical to create a level playing field from which to drive genuine improvement.”
Mr Mittal said that the current system will not change how steel is made, only where steel is made. “Europe will continue to need as much steel as ever, but the likelihood is more of this steel will come from countries that do not have comparable climate policies,” he said.
“There must be measures to prevent carbon leakage in globally traded materials like steel,” Mittal said, adding that he was convinced that if the right policies were in place, they will make ‘a real and positive difference’.
Mittal told journalists that he sincerely hoped that Europe’s policy makers will see the logic behind a green border adjustment policy and give it serious consideration.