The European Steel Association (EUROFER) has published a position paper setting out how it believes the European Union Emissions Trading System (EU ETS) can be improved.
Axel Eggert, EUROFER’s director-general argues that the current proposal for the EU ETS post-2020 ‘puts the viability of the steel industry at risk’, including its most efficient producers.
EUROFER claims that recent research shows that the current EU ETS set-up would cost the steel industry around 34 billion Euros in direct and indirect carbon costs between 2021 and 2030, wiping out the industry’s ‘already squeezed margins’.
The European Commission recently discussed the fourth reform of the EU ETS, which EUROFER’s Eggert believes ‘presents an existential threat to the 330,000 jobs that the industry supports’.
The latest EUROFER position paper suggests a number of what it calls ‘practical solutions’, including 100% free allocation for the top 10% best performing installations for sectors at risk of ‘carbon leakage’. It calls for ‘realistic benchmarks’ based on real industry data and reflecting actual technological progress, and asks for the removal of the linear reduction factor of benchmarks and the cross sectoral correction factor in order to prevent free allocation falling below technically and economically feasible levels. Lastly, it wants compensation for indirect carbon costs on the level of best performers throughout Europe.
EUROFER believes that its solutions would ‘better reconcile industrial competitiveness in the post-2020 EU ETS and strengthen overall environmental progress.
“Fundamentally, world steel demand is expected to rise between now an 2050. As a necessary product for economic activity, steel will continue to be produced globally. The question for EU policy makers is: Do they want this production to take place in Europe, or abroad?”