The German Steel Federation VDEh say the cost to the steel industry in Europe as a result of the energy tariff for renewable energy in 2014 will increase by 18% to €300M.

The increase in the levy of 6.24 cents per kilowatt hour averages a cost increase of €500 for every employee in the industry, according to Hans Jürgen Kerkhoff, President of the German Steel Federation.

To curb skyrocketing costs, the association calls for an urgent reform of the delivery system. "The principle of a guaranteed feed-in tariffs can no longer be maintained ," said Kerkhoff. "Renewable energies have become stronger and have been more rapidly introduced to the market." A relief scheme for energy-intensive industries is still required to maintain international competitiveness and make investments and planning. In particular, by-product gases from steelmaking used to generate electricity should not be burdened with the levy.

"A reduction in industrial output is no solution to the rising electricity costs," warns Kerkhoff. "The levy would still remain high and continue to rise. However, it would be direct job losses in energy intensive industries and indirectly in the downstream value chain.

The EEG costs for the steel industry in Germany will rise to more than one billion euros. Competitive steel production in Germany would no longer be possible in this scenario," says Kerkhoff.