Europe needs immediate action for the steel industry

The association called for the implementation of the recommendations of Draghi's report on increasing the competitiveness of EU industry

A report by former ECB President Mario Draghi has thoroughly identified the bottlenecks that hinder the decarbonisation and competitiveness of EU industry, the European Steel Association (EUROFER) said.

The proposed recommendations for energy-intensive industries, including energy, trade, carbon leakage, financing and leading markets, should be integrated into the future Clean Industry Agreement and implemented without delay through concrete measures, EUROFER said in a statement.

‘The lack of a business case in Europe for the steel industry and its value chains, which are critical not only for innovation, decarbonisation and high quality jobs, but for the entire EU economy, must be addressed immediately with concrete measures,’ said Axel Eggert, Director General of EUROFER.

Eggert believes that it is time for the European Steel Pact, a set of measures for the steel industry, to become part of the wider clean industry deal announced by the President of the European Commission.

The EBA notes that Draghi’s report recognises a number of issues that have been repeatedly highlighted by European steelmakers.

In particular, it is argued that the gradual removal of free allowances and the replacement of the current ETS with a cross-border carbon adjustment mechanism (CBAM) entail high risks of delocalisation. Additional measures are needed to make CBAM effective before it is launched, as well as careful monitoring to avoid circumvention and reallocation of resources, decisions on exports from the EU, and the extension of CBAM to downstream sectors.

It also says that despite the growing share of renewables in the energy system, households and businesses are not yet benefiting from low energy prices that would create a competitive advantage for EU industry compared to the US and China. The European steel industry is looking forward to urgent measures that will lead to this goal in the short term.

The Association also raises the issue of financial incentives and resources for the industrial transition. The EU’s Innovation Fund alone is not enough, and only a portion of ETS revenues is currently being invested in decarbonising energy-intensive sectors such as steel. EUROFER, in particular, believes that support should be provided for both capital and operating costs through the earmarking of ETS allowances. The hydrogen bank and carbon contracts for difference should also be used to support the transition.

The recommendations also include the introduction of a minimum quota for public procurement and auctions for environmentally friendly technology products and locally produced components. As noted, clean steel produced in the EU is a key material for ensuring the sustainability of cleantech value chains.

In terms of trade policy, the EU must maintain the ability to respond quickly to market distortions while working on structural solutions.

As GMK Center reported earlier, EUROFER believes that the Clean Industrial Deal, including rapid and radical measures in the EU’s industrial, energy and trade policies, is the last chance to protect European industry from cheap imports.