Eurofer issued a statement this week ahead of the expected announcement by the European Commission of a set of new measures for the EU climate policies containing "concerning" proposals over the emission trading scheme (ETS) and carbon border adjustement mechanism (CBAM).

Later this week the EC is set to publish its Fit for 55 package, described as "one of the most significant - and largest - groups of measures the EU has ever released in one go." The package will revise EU climate policies, Kallanish notes.

Within the package Eurofer expects a steep reduction of free allocations of ETS allowances. These would "increase the steel industry exposure to EU ETS costs" and "artificially drive up the carbon price."

In addition to that, the EC is set to announce its CBAM plan, a system to protect the market further from carbon leakage. Nevertheless Eurofer noted that "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 Axel Eggert, director general of Eurofer. “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 ETS1 costs between 2021-2030."

Eurofer indicates that ETS allowances should not be limited further and indirect CO2 costs should be compensated until the first industrial decarbonisation projects have been upscaled properly. Further actions by Eurofer are expected once the full package of measures is published.