The European Commission is expected to adopt a proposal revising the EU emissions trading system (ETS) giving the Commission ‘carte blanche’ to interfere in the system to artificially increase the allowance price by reducing the amount of CO2 allowances put on the market.

In a statement from Eurofer, Gordon Moffat, director general of the organisation said:

“Industry requires certainty. A cancellation of allowances is a de facto increase of the CO2 target for 2020 beyond the 21% as set by the directive. We call upon member states, the European Parliament and the Commission to stick to their promises and stop additional unilateral policy while other countries haven’t committed to anything. This policy is risking Europe’s industrial base and economic prosperity. There is no technology available for steelmaking that would allow the industry to reach even the existing target. We need rather a sectoral approach based on economically viable technologies. The ‘one-size fits all’ policy must end”,

Europe’s steelmakers are against a set-aside or cancellation of allowances as:
? It was a clear promise of the EU that it would only go beyond its overall 20% reduction target in case of an effective global agreement on climate change.
? The ETS Directive directs that its 21% GHG reduction objective should be achieved in a cost-effective manner (Article 1 ETS directive); a low carbon price makes the system affordable which is a core principle of the ETS.
? It will lead to a further distortion by the ETS within industrial sectors such as steel since some steelmakers will have to buy on the market while others will not (some steelmakers will have no unused allowances from the second trading period when the third period starts. Companies which had a high degree of capacity utilisation during the crisis - would be punished by an artificial increase of the carbon price.
? A set-aside will lead to an increase in power prices further jeopardizing the competitiveness of electricity intensive sectors such as electric arc furnaces (important for recycling steel).

China now has per capita CO2 output which is close to that of the EU (China 7.2t, EU 7.5t CO2 per capita). Europe will produce about 170Mt of steel this year, China about 735Mt. Mr Moffat continued: “The EU’s share in global CO2 emissions is only 12%, its per capita emissions will very likely be surpassed by China this or next year. It is obvious, that the EU must rethink its isolated climate policy. No other country in the world puts its own industry at stake with technically unachievable climate targets. If the Commission gives us a new, economically viable technology for steel, we will be more than happy to apply it. Until that day, it should support us in finding new ways of steelmaking.”

The European steel industry is a world leader in its sector with a turnover of €170bn and direct employment of 360 thousand highly skilled people, producing on average 190Mt/y. More than 500 steel production and processing sites in 23 EU member states provide direct and indirect employment and a living for millions of European citizens.