Brussels, 12 July 2021 – The European Commission is expected to put forward its Fit for 55 package of climate and energy policy measures on 14 July 2021. The Fit for 55 package is one of the most significant - and largest - groups of measures the EU has ever released in one go. It will completely revise the basis of EU climate and energy policy in attempt to bring it into line with the EU's political ambition.

“EU institutions have agreed to more ambitious cuts to greenhouse emissions over a fairly short time frame. This package of new laws to be proposed by the Commission is intended to legislatively implement the political ambition”, said Axel Eggert, Director General of the European Steel Association (EUROFER).

The Fit for 55 package includes: the revision of the EU Emissions Trading System (ETS), a Carbon Border Adjustment Mechanism (CBAM), revision of the Energy Tax Directive (ETD), amendments to the Renewable Energy (RED) and Energy Efficiency Directives (EED) to implement the ambition of the new 2030 climate target, as well as others on reduction of methane emissions from the power sector, emissions from land use and rules on passenger cars and alternative fuels.

“The European steel industry has long-established plans to reduce emissions by 55% compared to 1990 levels, and has over a hundred highly-advanced low-carbon projects spread across Europe”, added Mr Eggert. “However, the success of these projects its contingent on being able to direct the appropriate resources and find markets for the resulting ‘green’ steels, which will come at a higher cost than conventional steel”.

Mr Eggert stated: “For Fit for 55 – and the associated Green Deal – to become successful growth strategies, they must provide three things: effective carbon leakage protection, affordable low-carbon energy, and firm support for the development and roll-out of breakthrough technologies”.

The Carbon Border Adjustment Mechanism and the revision of the Emissions Trading System

Within the Fit for 55 package, EUROFER is particularly concerned at the European Commission’s apparent intentions for the EU ETS revision. The steep reduction of free allocation would markedly increase industry exposure to EU ETS costs. The ‘rebasing’ and Market Stability Reserve changes would artificially drive up the carbon price for the same level of 2030 climate ambition.

The Commission is also expected to propose that most of the European steel sector be subject to the CBAM in the first wave. However, at this stage it is unlikely that the proposal will include any solution for EU export competitiveness or provide any effective measures against circumvention practices by importers, such resource shuffling or cost absorption.

“Higher climate ambition requires strengthened – not weakened – carbon leakage protection”, said Mr Eggert. “Artificially higher carbon costs would hinder the steel sector’s ability to reduce emissions and meet our targets. Even before the current EU ETS revision, the sector was facing €30-45 billion in EU ETS[1] costs between 2021-2030”.

In line with the March 2021 European Parliament vote, EUROFER calls for the CBAM and EU ETS to be complementary systems, without any further reduction in free allocation below the benchmark level, and compensation of indirect CO2 costs until the first industrial decarbonisation projects have been upscaled and work properly.

­The Fit for 55 package is expected on 14 July. EUROFER will react further once the legislative files have been examined.

[1] €30 billion based on the current EU ETS price of €55. €45 billion if the EU ETS allowance price rises to €100 per EUA. This calculation is based on the current shortage of allowances under the current EU ETS regime finalised in 2018.

Notes for editors

Contact
Charles de Lusignan, Spokesperson and Head of Communications, +32 2 738 79 35, (charles@eurofer.be)

About the European Steel Association (EUROFER)
EUROFER AISBL is located in Brussels and was founded in 1976. It represents the entirety of steel production in the European Union. EUROFER members are steel companies and national steel federations throughout the EU. The major steel companies and national steel federation of Turkey and the United Kingdom are associate members.

The European Steel Association is recorded in the EU transparency register: 93038071152-83.

About the European steel industry
The European steel industry is a world leader in innovation and environmental sustainability. It has a turnover of around €170 billion and directly employs 330,000 highly-skilled people, producing on average 160 million tonnes of steel per year. More than 500 steel production sites across 22 EU Member States provide direct and indirect employment to millions more European citizens. Closely integrated with Europe’s manufacturing and construction industries, steel is the backbone for development, growth and employment in Europe.

Steel is the most versatile industrial material in the world. The thousands of different grades and types of steel developed by the industry make the modern world possible. Steel is 100% recyclable and therefore is a fundamental part of the circular economy. As a basic engineering material, steel is also an essential factor in the development and deployment of innovative, CO2-mitigating technologies, improving resource efficiency and fostering sustainable development in Europe.