Europe has the unique opportunity to lead the transformation of its economy to a future in which it is CO₂ neutral, environmentally responsible, circular and able to compete internationally, addressing third country trade distortions without inhibition. Steel is central to the EU economy, and it underpins the development of major manufacturing sectors right along the value chain. Our industry sustains 2.6 million direct and indirect jobs in the EU[1].

To make the EU’s recovery plan and green transition a success, a Green Deal on Steel should be agreed between EU steel industry and the EU institutions and governments, with a clear action plan establishing a market for green steel in the period 2021 to 2030. This plan can serve as a blueprint for other sectors, and help the industry out of the worst economic crisis in decades.

Why steel?

Because the EU steel industry:

• is able to significantly advance the EU’s climate objectives as CO₂ emissions are concentrated in a limited number of installations that cover about 25% of EU industrial and 5% of EU total CO₂ emissions;
• is most advanced among the energy intensive industries in terms of CO₂-low projects[2];
• is already committed to reducing CO₂ emissions by 2030 by 30% compared to 2018 (which equates to 55% compared to 1990) and towards carbon neutrality by 2050, under the right conditions;
• will allow the EU to set a global example for hard-to-abate industries can significantly lower their CO₂ emissions in a relatively short period of time.
• is a strategic sector producing 100% recyclable, circular materials for the EU’s key industries such as automotive, mechanical engineering, CO₂ low energy industries, construction, household goods, packaging, medical devices, sanitary systems, defence, among others.

What can we achieve?

The EU needs a supportive regulatory framework and enabling policies to empower the European steel industry to contribute to the EU’s climate objectives and sustainable growth targets. The sector would be able to develop, upscale and roll-out new technologies that could reduce EU steel production’s CO₂ emissions by 30% by 2030 compared to 2018 emissions (or about 55% compared to 1990) and by 80 to 95% by 2050, while contributing to greenhouse gas mitigation across all sectors.

However, changing circumstances resulting from the COVID-19 crisis will have to be taken into account. The European steel industry and its value chain have been severely affected by its impact. In September 2020 approximately 40% of the steel workforce was still affected by temporarily lay-offs and reduced working, while average production in the period from March to September was 21% below the levels of previous year. Recovery is very slow and fragile, and stockpiling in third markets may deprive the European steel industry of a fair chance to rebound.

A plan of action: A Green Deal on Steel

In light of the EU’s climate ambition, agreement on a comprehensive plan of action to implement it is urgently needed. A regulatory framework is required to allow companies and investors today to make investment decisions for the coming decade and beyond.

A Green Deal on Steel should not be necessarily a single policy. The related Action Plan would rather outline how existing EU policy fields shall be updated, combined and expanded in order to achieve the objectives of carbon neutrality, secure jobs and a prosperous industry, while supporting field-testing of best practice in low-carbon steelmaking. The German “Steel Action Concept”[3] is a good example of such an approach undertaken at national level. This initiative can, and should, serve as the basis for agreement on a similar initiative at an EU level, with a coordinated approach for the EU’s climate, energy, trade, and industry-related policies.

These Green Deal on Steel actions need to be compatible with, and inclusive of, the various facets of the EU’s broader Green Deal climate policy; the Green Deal will have a wide and varied impact across all EU industries, thus it must be coherently constructed and deployed. The success of the Green Deal depends on the horizontal, cross-sectoral integration of an industrial strategy and needs to be implemented throughout the full value chain.

The policy recommendations below are essential to succeeding in the aims of ensuring the EU steel industry remains on track to meet its envisaged emissions reductions targets (i.e. 30% by 2030 and 80-95% by 2050) whilst also remaining competitive globally and finding a sustainable market for its green steel products.

[1] The impact of the European steel industry on the EU economy. Oxford Economics, May 2018

[2] Highest Technology Readiness Levels (TRL) are achieved in a large number of projects, several large-scale projects already started, including hydrogen-based steelmaking, carbon capture and usage, and carbon capture and storage.

[3] https://www.bmwi.de/Redaktion/EN/Publikationen/Wirtschaft/the-steel-action-concept.html