New obstacles to the decarbonization of the steel industry in the EU

The combined effects of the energy crisis and the invasion of Ukraine by Russia have added new obstacles to decarbonization of the EU steel industry. The steep rise in energy prices, high inflation and the shortage of raw materials are already affecting the economy and society in general, including the steel industry.

In this context, it is essential that ETS and CBAM reach the agreed climate objectives for 2030. At the same time, supporting investments, maintaining effective measures for the relocation of carbon emissions. And avoiding disproportionate costs, capacity closures and job losses.

ETS and CBAM are two fundamental elements of the regulatory framework for the transition to green steel manufactured in Europe.

The EU Emissions Trading System (ETS) aims to reduce CO2 emissions from industry.

The border adjustment mechanism based on carbon (in short, MACF in Romanian or CBAM in English) was thought of as a tool to combat climate change. Which should cause the relevant sectors to modernize and thus reduce their carbon footprint.

Obstacles to decarbonization – The 60 green steel production projects in Europe are threatened if they are not supported.

Obstacles to decarbonization

Green steel production projects in Europe are under threat. On its way to climate neutrality, the EU steel industry has the ambition to reduce its CO2 emissions by at least 30% by 2030 compared to current levels. This would be a truly new industrial revolution. But it requires massive capital investments of over 30 billion euros. With significantly higher operational costs resulting from decarbonized energy and green hydrogen. In parallel, investments in the energy infrastructure should be accelerated at an unprecedented speed. Access to ferrous waste must be urgently consolidated within the EU.

With the June plenary vote on the ETS and CBAM, members of the European Parliament will have a crucial opportunity to shape the regulatory framework that will help the European steel industry translate its ambitious plans into reality and make the EU a world leader in the production of green steel.

Steel industry

„Energy-consuming industries (such as steel) must be integrated at all levels of policy making and political discussions. As key factors of the decarbonization and independence of the European energy system……….. The rapid access of the steel industry to green hydrogen will stimulate the hydrogen markets in Europe. But alternative sources of gas, other than those from Russia, will remain crucial. As long as no hydrogen infrastructure is available at affordable costs. We need a review of the EU’s energy strategy for the sake of cohesion, cooperation and cross-sectoral dialogue”. Said Axel Eggert, general director of the European Steel Association (EUROFER).

A review of the European energy system, positioning industrial consumers at its center, is vital. To overcome both the current energy crisis and the climate crisis. Because EU industry will be the main driver for clean energy markets. In particular, short-term aid measures for companies affected by high energy prices. Also, the rapid realization of hydrogen infrastructure and priority access to hydrogen supply for the sector should be granted immediately. At the same time avoiding gas supply interruptions as long as the alternative infrastructure is not available.

Article sources

https://www.theparliamentmagazine.eu/

https: //www.eurofer.eu/