EU Steel Producers call for ETS Cost Freeze
Leading European steel producers have called on European policymakers to stop the rising costs of the emissions trading System (ETS) until companies have a strong economic case for investing in transformation.
Callanish notes that the European Commission is due to present its long-awaited review of the ETS in July.
In a letter addressed to European Council President Antonio Costa and European Commission President Ursula von der Leyen, companies including ArcelorMittal, thyssenkrupp, voestalpine, Moravia Steel and Vitkovice Steel demand "decisive intervention" to reduce ETS costs. This includes recalibration of the free ETS distributions, basic methodologies and values, the CBAM coefficient and the intersectoral correction factor (CSCF).
"Further free distribution arrangements currently under discussion should be avoided, as this would weaken the planned carbon leakage prevention system," the companies state.
This intervention should allow firms to create a robust business environment for transformation investments, backed by "comprehensive and robust policies" that encourage the adoption of low-carbon products and circular products, they add. ETS revenues should also be "channeled into affordable, technology-neutral support for industrial transformation linked to proven emissions reductions."
"ETS no longer reflects modern global realities. Europe, in fact, is acting alone, imposing rapidly increasing carbon dioxide emissions costs on its industry," the letter says. Meanwhile, the conditions necessary for industrial transformation are lacking, and critical infrastructure in the fields of energy, CO2, hydrogen, and CCS production is missing or insufficient. Investment mechanisms are unreliable, and consumer demand and willingness to pay for low-carbon products are low, the signatories note.
They add that CBAM remains untested and leaves processing industries exposed.
"If the current policy is maintained, the rising costs of carbon emissions will be passed down the value chains, which could lead to carbon dioxide leakage, lower profitability, reduced production, and accelerated plant closures. The consequences – job losses, reduced investment, and weakening economic growth – can be foreseen," the letter says.
"Time is running out. A decisive and immediate policy adjustment is needed to preserve Europe's industrial foundation and ensure a reliable path to transformation," the statement said.
Author: Adam Smith
Kallanish.com