The European Union's current climate policy could accelerate the collapse of blast furnace steel production in the bloc, which is suffering from a combination of the Carbon Boundary Adjustment Mechanism (CBAM) and the phasing out of free CO2 emissions quotas, says Antonio Gozzi, president of the Italian Steelworkers Association Federacciai.
.Speaking at the association's annual assembly on Monday, overseen by Kallanish, Gozzi said that with the CBAM coming into effect on January 1, 2026, the gradual reduction of free emission quotas for industries that are difficult to reduce will lead to higher prices for CO2 emissions quotas. According to some forecasts, carbon prices could eventually reach $200 per ton, leading to significant costs for energy-intensive industries and an even greater burden for households and businesses.
"Without free CO2 emissions quotas, all European blast furnaces are doomed to close due to exorbitant additional production costs," Gozzi warned. This would be an "absurd result," given the strategic importance of blast furnace technology for the production of certain types of high-quality steels, he added. He argued that carbon capture technologies, with proper support from the EU, could allow these plants to survive.
Gozzi also criticized "ill-conceived hydrogen steel production projects" that are failing across Europe. The transition to production in electric arc furnaces, based on ferrous scrap, will limit Europe's ability to produce deep-drawn steel, which is necessary for the production of automobile bodies, he noted. "After 2035, the remaining European automotive industry will have to import steel sheet for car bodies from competing countries such as China, Japan and South Korea," he said.
He warned that the next stage of the EU's emissions trading system (ETS) could be the "last nail in the coffin" for European manufacturing if reforms are not implemented. "For this reason, it is urgently necessary to review the entire ETS system, as well as consider its impact on energy prices. … Urgent measures are needed to immediately stop the spread of ETS/ETS2 to new sectors such as small and medium-sized enterprises and residential buildings, and to prevent the cancellation of free benefits for industries that are difficult to reduce. We urge the Italian Government to take immediate action before it's too late," Gozzi demanded.
Finally, he called for technological neutrality in the EU's climate policy. "Decarbonization should not be based on any one technology,
