On 23 and 24 October 2014, the EU heads of state and governments will decide on a new, ambitious long-term energy and climate policy for Europe. In doing so, they will also be making a decision on whether industrial growth and jobs have a place in the future EU economy.
In an open letter published today, 60 CEOs representing almost 100% of EU steel production say:
“We all share the ambition to find an effective response to climate change. To be effective, such a response needs a policy which supports a healthy industry with jobs in Europe.”
The draft European climate and energy policy framework for 2030, in its current form, would put 335,000 direct and 1.5 million indirect steel industry jobs under serious threat, if no clear guidance for safeguarding the competitiveness of industries exposed to global competition is set. This is because the burden on the steel industry, imposed by the policy in its current form, will result in huge losses for even the most efficient steel plants in Europe making them uncompetitive. Once implemented, the EU emissions trading system alone could cost the EU steel industry around €70-100 billion in the period 2020 to 2030. These costs are likely to exceed the steel industry’s EBIDTA, removing profit margins and the ability to invest.
A healthy foundation industry benefits European society as a whole. The steel industry’s products and product applications and our employees, are the foundations for a low carbon, energy efficient, and prosperous European society.
The CEOs’ letter concludes by reminding heads of State of their promise made at the EU summit in March 2014 that the decision on the new policy framework will provide the necessary basis for growth.
“We, the undersigned CEOs, now trust in this promise.”
What the steel industry is asking Europe’s heads of state when they meet on 23 and 24 October, is to adjust the current draft policy framework so that European steel companies can stay competitive on a global level: it is vital to have realistic, sector-based targets that are set according to what is technically and economically possible – as opposed to theoretical targets that are impossible to achieve.
“What we require from the EU summit on 23 and 24 October 2014 is simple: to give clear guidance that the EU’s new climate and energy framework will – at the level of best performers - not impose regulatory direct and indirect CO2 costs on globally competing European industries.”
Background information for a reform proposal for the
EU Emissions Trading System
The EU Commission should start using realistic impact assessments and take into account the steel industry’s real CO2 reduction potential according to the Low Carbon Steel Roadmap 2050.
Sectors at risk of carbon leakage must be provided with truly 100% free allocation at the level of the 10% most efficient installations, based on technically and economically achievable benchmarks, and based on real production instead of historic production.
Those above the benchmark will have to buy additional allowances on the market. This gives them the right incentive to improve their carbon efficiency to the level of achievable benchmarks. If they go beyond those benchmarks by developing and applying innovative technologies, they may set new, more ambitious benchmarks.
The so-called correction factor must be removed for sectors at risk of carbon leakage, because it artificially cuts free allocation below the benchmark. By this, the carbon leakage provisions are being reduced to absurdity because in 2030 even the most efficient steel plant in Europe would have a shortage in free allocation of at least 50%, or more if growth of production is not honoured with additional allocation.
The steel industry needs full off-setting of CO2 cost-pass through in electricity prices in all member states by either financial compensation, free allocation, or re-designing the electricity market in a way that it prevents any carbon price pass through in electricity prices, or a combination of these.
The European steel industry has lost over 20% of its workforce since 2008. EU crude steel output is down 20% compared to pre-crisis levels. Without rebalancing the EU’s industrial, climate and energy policies our sector, which provides 1.4% of the EU’s GDP and 335,000 of direct and about 1.5 million dependent jobs, will further decline and with it industrial manufacturing and jobs in Europe.
Contact: Barbara Herbst, Communications Manager, +32 2 738 79 32 (email@example.com)
Represented by EUROFER, the European steel industry represents the world leader in its sector, producing on average 170 million tonnes of steel per year with direct employment of 335 thousand highly skilled people. More than 500 steel production and processing sites in 24 EU member states provide direct and indirect employment for millions of European citizens.