On 20/21 March, the EU Heads of state and governments will discuss about EU industrial competitiveness and energy and climate targets.
“We all share the ambition to find an effective response to climate change. However, hopes for the early conclusion of a global agreement providing a level playing field have been dashed and, with the best will in the world, the likelihood of an agreement in 2015 creating a truly level playing field is remote.
We, the undersigned CEOs, urge the heads of state and governments to restore balance between industrial, energy and climate policies in order to preserve the competitiveness of the industries which are at the core of the European economy.”
64 CEOs of the European Steel Industry, amongst them EUROFER-President Wolfgang Eder, CEO voestalpine AG, Aditya Mittal, CEO ArcelorMittal Europe and Karl Koehler, CEO and Managing Director Tata Steel, believe in a solution for a real win-win EU energy and climate policy without damaging Europe’s manufacturing industries.
This spring in Brussels is a unique opportunity to safeguard the global competitiveness of Europe’s trade and energy intensive industries such as steel. The starting point, though, was bumpy. The Commission has set new ambitious unilateral climate targets for Europe up to 2030 while details are missing. No industry can be expected to make investment decisions on this basis.
The proposed EU ETS target of 43% CO2 emission reduction by 2030 compared to 2005 means a 60% reduction for the EU steel industry compared to 1990, which is technically and economically impossible to achieve with current technologies. This has been confirmed by studies of the EU’s Joint Research Centre. With the so-called correction factor cutting down free allocation since 2013 even the most efficient steelmaker in Europe will have a cost disadvantage vis-à-vis its non-European competitors. Some of the most efficient steel plants may have to buy up to 30% of their needs in emission permits already by 2020.
The current surplus from the crisis will in the short term turn into a huge shortage. The current EU ETS directive and 2030 proposal does not solve this problem but worsens in that that these most efficient plants could be obliged to buy up to 80% of their allowances in 2021 and 100% in 2027, if they still exist.
The steel industry has lost over 15% of its workforce since 2008. EU crude steel output is down 20% of 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 350.000 of direct and about 1.5 million dependent jobs, will further decline and with it industrial manufacturing and jobs in Europe.
According to a study commissioned by the European Commission, EU regulatory costs represent a share of over 30% of the EBITDA of the EU’s steel industry in recent years, costs which our global competitors do not have to bear. This trend must be stopped now.
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 350 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.
Barbara Herbst, Communications Manager, +32 2 738 79 32 (email@example.com)