UK Steel welcomes entry into EU carbon markets
The UK Steel Industrial Association welcomed the agreement between the EU and the UK to work towards the formal unification of their emissions trading systems (ETS), as well as to improve EU quotas for UK sections, Kallanish notes.
It says this will improve access to the UK's largest export market, as 75% of British steel supplies go to the EU, which amounts to almost 3 billion pounds (4 billion dollars) per year. This indicates she has been acting as a binder of carbon markets since 2019, noting the UK's minimum size and illiquidity.
The move will exempt UK steel exports to the EU from the Carbon Border Adjustment Mechanism (CBAM) costs and administrative barriers.
"We understand that the improvement of steel in the EU quotas will relate to measures regarding EU steel guarantees that will ease export restrictions for steel corners and heavy parts," its statement notes.
The European Commission claims that the EU and the UK have agreed to guarantee the lifting of tariffs on free trade in category 17 steel products. Thus, the EU will introduce a legislative proposal to introduce country-specific quotas for British steel of category 17 – corners and profiles - as part of the existing protective measures.
Without networking or improved market access, British producers are faced with the prospect of increased trade friction, UK Steel said. EU importers would have to pay CBAM taxes and face tough protective quotas on British steel products – costs that would likely be shifted back to British exporters or lead to a loss of market share.
Gareth Stace, CEO of UK Steel, said: "UK Steel welcomes the official plan to merge UK and EU emissions trading schemes and new, improved market access. This will be an important step in reducing steel trade differences with the EU, our largest export market, by ensuring carbon equivalent costs and simplifying exports. It also eliminates the risk of costs associated with the EU's carbon emissions regulation mechanism, when the burden falls particularly on small and medium-sized enterprises."
"It is important to note that combining these schemes reduces costs for the sector and ensures long-term security, especially if UK ETS prices were to exceed EU prices in the coming years, which makes interconnection even more important for competitiveness," he concludes.
Carrie Bone, United Kingdom
kallanish.com