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EUROFER: Changes to EU's Emissions Trading System Would Cost Steelmakers EUR34 Billion
11/30/2015 - Revisions to the European Union Emissions Trading System would be so costly to implement that they would just about erase the steel industry’s margins, according to EUROFER, the European Steel Association.
The association, citing a report by the ECOFYS consultancy, said the proposed revisions would cost the industry EUR34 billion and could create a 48 percent shortfall in free allowances for direct carbon emissions by 2030.
“This staggering €34 billion figure equates to almost €30 per tonne of crude steel by 2030. Given that the steel industry’s average EBITDA has fluctuated around €35 over the past few years, this proposal can only be expected to destroy the industry’s economic viability,” said Axel Eggert, EUROFER director general.
“Given fierce global competition and surging imports resulting from worldwide overcapacity, the industry will be unable to pass on these unilateral costs,” he said.
The association, which commissioned the report, said the EU’s steel industry has been able to reduce its energy usage and cut its carbon dioxide output in half over the past few decades through sustained investment in innovation. The proposal would endanger future investment, the association said.
“Innovation requires investment: the present proposal would actually reduce the ability of steel producers to make such investments,” said Eggert. “There should be no additional direct or indirect costs at the level of best performing installations. This would incentivize and facilitate the innovation needed to meet CO2 reduction objectives.”
“This staggering €34 billion figure equates to almost €30 per tonne of crude steel by 2030. Given that the steel industry’s average EBITDA has fluctuated around €35 over the past few years, this proposal can only be expected to destroy the industry’s economic viability,” said Axel Eggert, EUROFER director general.
“Given fierce global competition and surging imports resulting from worldwide overcapacity, the industry will be unable to pass on these unilateral costs,” he said.
The association, which commissioned the report, said the EU’s steel industry has been able to reduce its energy usage and cut its carbon dioxide output in half over the past few decades through sustained investment in innovation. The proposal would endanger future investment, the association said.
“Innovation requires investment: the present proposal would actually reduce the ability of steel producers to make such investments,” said Eggert. “There should be no additional direct or indirect costs at the level of best performing installations. This would incentivize and facilitate the innovation needed to meet CO2 reduction objectives.”
