A thriving European steel industry is crucial for the EU’s strategic autonomy and resilience. However, over the past decade, the EU has shifted from being a net steel exporter to a major net steel importer, losing 30 million tonnes of sales on the EU and export markets. Additionally, the EU steel industry has lost 26 million tonnes of steel production capacity and 25% of its workforce.

The EU is facing a new global reality. To ensure that the EU remains competitive in the middle of the greatest transformation of the industry towards climate-neutrality, it is essential to adopt disruptive thinking and innovative measures. Otherwise, competitors such as the US and China are likely to create a more attractive investment and production environment for green steel, further threatening the EU’s strategic autonomy. The US Inflation Reduction Act (IRA) alone will provide at least USD 85 billion of funding for steel production and upstream energy requirements.

Steel is essential for a climate-neutral economy. Renewables, hydrogen, wind and electric vehicles, are all dependent on steel. It is estimated that more than 74 million tons of steel will be required for the expansion of renewable energy generation alone, demonstrating that the foundations of the Net-zero Age are made of steel. A successful EU industrial policy requires a value chain-based approach, with steel at the core of the Green Deal Industry Plan and as an integral part of the Net-Zero Industry Act. To transition steel and other energy-intensive industries towards carbon neutrality and enhance circularity while ensuring the EU industry’s competitiveness is protected, the following enabling conditions are indispensable:

1. Access to sufficient and globally cost-competitive fossil-free energy and primary and secondary raw materials such as steel scrap, which is strategic.

• The steel industry calls for a thorough impact assessment of all options to marginal pricing in the electricity market-design including the possibility to adopt non-market-based mechanisms such as regulated tariffs, also for energy-intensive industries, public guarantee schemes for long-term energy arrangements such as Power Purchase Agreements (PPAs) and hedging, and a system-efficient redistribution of revenues to support consumers and investment in renewables.
• The steel sector also asks for the prioritisation of supply of hydrogen (H2) and related infrastructure planning based on the GHG abatement potential, in particular in the initial phase when hydrogen is in short supply.

2. Better tailored, more certain, clear and flexible funding and financial incentives across the EU are required, as well as faster processing of applications. Increased support for the roll-out of low-carbon steel projects rather than for research and innovation is necessary.

3. Establishment of lead markets for green steel and products (including low-CO2 steel); this could be achieved through public procurement, quotas, ambitious GHG thresholds or introduction of GHG pricing for final products based on their lifecycle emissions.

4. Trade policy that levels the playing field with global competitors:

• Maintaining the EU steel safeguard to prevent serious injury as long as the necessary conditions
  are met. Promoting an EU-US Global Arrangement on Sustainable Steel that effectively tackles
  global steel excess capacity and incentivises ambitious steel decarbonisation in other regions, with
  comparable measures in the US and in the EU.
• Adopting a solution for EU steel exports before the Carbon Border Adjustement Mechanism kicks
  in in 2026 to prevent further losses of EU steel exports.

It is also essential to prioritise and mainstream industrial policy and competitiveness while reducing regulatory burdens in all policy initiatives and legislative proposals, ensuring long-term predictability.

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