The mandatory use of low-emission steel in the EU construction and automotive sectors will allow steel to receive an environmentally friendly premium, which will partially affect the price of the final product. The European Commission notes that such predictability of future demand for low-emission materials can cover part of the investment costs for the transition period and encourage further investment decisions on decarbonization.
Earlier this week, the Commission published its legislative proposal for the Industrial Acceleration Act (IAA), which includes a provision that 25% of the steel purchased for government projects starting in 2029 should be low-emission.
In its IAA impact assessment, the Commission notes that there are at least 29 announced steel decarbonization projects with a combined potential output of an additional 41 million tons of low-emission steel per year by 2030 that have not yet reached the final investment stage.
The proposed measures to develop the leading market could attract up to 15.5 billion euros ($18 billion) in investments, covering approximately 15% of the sector's total investment needs of 100 billion euros by 2050, according to a document monitored by Kallanish.
"This measure will create a more stable and predictable domestic market for European manufacturers, which will allow them to conclude long-term contracts for low-carbon materials for public works and auxiliary sectors. It is expected that this stimulation of the domestic market will compensate for any slight decrease in export volumes, increasing industrial workload and accelerating the recovery of investments," the document says.
"In addition, by slightly increasing domestic production and reducing exposure to highly concentrated foreign supply chains in supported segments, this measure provides a modest increase in economic security, reducing vulnerability to sudden price changes, coercive practices, or export restrictions from dominant suppliers," the document says.
As for how this measure affects the competitiveness of the processing sector, "given the significant proportion of vehicle registrations supported by government support programs, it is reasonable to expect that the introduction of requirements for low-carbon steel and aluminum as a condition for access to such support will strongly encourage vehicle manufacturers to adopt low-carbon technologies."carbon materials are used in a significant part (if not all) of the product range
