The EU should consider using its local fossil fuel resources to ensure economic sustainability during a period of geopolitical instability, while the focus on nuclear energy development, while correct, will not benefit steel producers in the near term. Prices in the Emissions trading System (ETS) should be kept at a lower level, and the system should be able to respond to prevent costs during crises.
This is what Peter Popelar, Chairman of the Management Board of Moravia Steel, said in an exclusive interview with Kallanish this week.
ETS needs to be reviewed to ensure continuity in the industry.
ETS has been in the spotlight in recent months, as the phase-out of free benefits begins on January 1, as well as the phased implementation of CBAM. Due to the escalation of the conflict in the Middle East, which is putting pressure on fuel prices, monitoring of the situation has increased even more. EU government leaders are expected to discuss the potential weakening of the ETS during their summit scheduled for Thursday and Friday.
For Moravia Steel, which owns the Czech steel producer Trinecke Zelezarny, the free ETS emissions quotas in 2026 will be significantly less than for its emissions company. Popelar notes that with the EU-set price (EUA) of about 80 euros per tonne of CO2, this would mean additional costs for the steelmaker of about 100 million euros, making it difficult to invest in decarbonization projects at the required pace.
The forecast is not helped by the fact that financial speculators are allowed to trade surcharges and create price volatility in the EU and unpredictable costs for industry. "The market stability reserve should keep ETS prices more stable and closer to the levels initially expected by the European Commission, at around 25-45 euros per tonne in 2026," he said. "In times of geopolitical turmoil or energy crises, the system must be able to respond and avoid additional costs."
Nuclear energy is a "missed opportunity", the EU's fossil fuel reserves need to be exploited
Given the current situation with high energy prices and supply uncertainty, the reluctance of some EU countries to use nuclear energy "has led to increased costs and missed opportunities," Popelar said. However, the mood in the EU has changed for the better. "While acknowledging this strategic mistake is correct, time and investment constraints mean that energy-intensive industries will not benefit from new nuclear capacity in the near future.
