European Steel Industry Cannot Work Under Future European Emissions Targets, Report Finds
12/24/2012 - Emission targets set by EU climate policies are unachievable for the European steel industry. This is the conclusion of study recently published by the European Commission’s Joint Research Centre (JRC).
Emission targets set by EU climate policies are unachievable for the European steel industry. This is the conclusion of study recently published by the European Commission’s Joint Research Centre (JRC). It shows that the industry can reach a maximum of 11 to 19% CO2 emission reductions up to 2030 if it applies current best technologies and innovative solutions that may become available in the future. The 2030 target set by the EU Emissions Trading Scheme (ETS), however is 37.4%. The 2030 milestone in the European Commission’s “Roadmap for moving to a low carbon economy in 2050” is 43 to 48% for ETS-sector industries. The JRC report demonstrates that it is impossible for steel companies to meet these emissions targets.
The report by the European Commission’s in-house science service is titled Prospective Scenarios on Energy Efficiency and CO2 Emissions in the EU Iron & Steel Industry. The researchers have developed scenarios that illustrate the influence of different prices for fuel and resources as well as CO2 emissions allowances on the energy efficiency performance of the industry. The report finds that higher prices are “ineffective as major levers of change.”
The maximum abatement values of 11 to 19% the authors have identified refer to the two major steel production routes via electric arc furnaces and blast furnaces. Both values are based on a scenario with a carbon price of € 200 per tonne. This shows that even under the pressure of an extremely high carbon price the steel industry will not be able to develop and implement technologies for reductions beyond 19%.
The authors conclude that “demand-pull measures supported by the public authorities (through CO2 prices) do not appear to be significant in bringing about changes in the industry”. This is further illustrated by the so-called baseline scenario, for which the study assumes a carbon price of € 39 per tonne in 2030. In this setting the abatement potential is 11 to 14% and does not differ significantly from the 200 euro per tonne scenario.
The report confirms the reasons behind the European steel industry’s deep concerns about climate policies in the European Union: “If an allowance price of 200 euros is not enough to bring about technologies for meeting EU emissions targets, it is certainly more than enough to drive the industry out of the market,” says Gordon Moffat, Director-General of EUROFER, the European Steel Association. “This study, carried out by the Commission’s own research body, shows that our claims about emission targets being unachievable for the industry and a serious danger for Europe’s industrial base are more than justified. It also highlights how the European steel industry is under constant pressure to reduce emissions while necessary technologies to do so are unavailable.”
Carbon pricing, the JRC study proves, is ineffective for a globally traded basic material like steel, as long as there is no international agreement setting the same framework for the global competitors of the European steel industry. It risks relocation of the industry to regions outside Europe without comparable regulations.
Without a globally competitive steel industry Europe would lose the backbone of its industrial base. Steel is indispensable for industrial value chains and closely connected to key industry sectors. Steel is also the basis for technologies that are urgently needed to achieve the CO2-mitigation targets of the European Union: highly efficient power plants, reliable supplies of renewable energies or lightweight, fuel-efficient cars – all of these rely on innovative steel solutions for construction and production. The CO2 balance of steel is positive in this life-cycle perspective. The amount of emissions the material can save in application is significantly higher than the amount emitted in the production phase.
