Eurofer has strong concerns about the European Commission decision on Member States' national implementation measures (NIMs) for the third EU ETS trading period.

The decision, adopted 5 September, applies the so-called cross-sectoral correction factor cutting benchmark-based free allocation for industrial installations by 5.73% in 2013, increasing thereafter to 17.56% in 2020. The average reduction of free allocation will be 11.58% over the period 2013 to 2020.

The steel sector already receives free allowances at levels far below the needs of even its best performers due to technically unachievable benchmarks and the sector is practically not allowed to grow beyond historic production levels. The new decision worsens the situation significantly as the sector needs to buy more allowances on the market. It increases the shortage in allowances for the most efficient European steel installations to up to 30%.

This is despite the sector being designated as ‘at risk of carbon leakage’ driving steel production out of Europe to regions without a carbon tax and generally less efficient plants. The fact is that the most efficient installations should have received 100% of their requirements for free. This was clearly the intent of policymakers when they designed the directive in 2008.

Gordon Moffat, Eurofer Director General said “This development makes a mockery of all promises of protection against carbon leakage. We therefore request urgent action from the Commission to reopen the file and remove the correction factor for sectors which are competing internationally. Without action, the good intentions expressed in the new European industrial policy and EU steel action plan would just be empty words and the efforts made by EU Commissioner Antonio Tajani would be in vain.”