core sector communique

EUROFER initiates legal action against the Commission decision on benchmarks for steel at the European Court of Justice

Unachievable steel benchmarks infringe ETS directive

EUROFER today announced that it would challenge the Commission decision on benchmarks under the European Emissions Trading System (ETS), once adopted by the Commission in mid-April.

“From the very beginning of the Commission consultation process on benchmarking we have stressed that the proposal made by the Commission’s climate department for the steel benchmarks infringes the ETS directive. The directive requires that best performers in carbon leakage sectors (ie sectors subject to international competition) receive for free all the allowances necessary to cover their emissions in order to prevent de-localisation of emissions, production and jobs to countries outside Europe – that’s the rule, but since it is not being applied for the steel industry, resulting in billions of additional costs, we now have no other choice than to go to court,” said Gordon Moffat, director general of EUROFER.

The directive requires the setting of benchmarks which determine the level of free allowances for industrial sectors from the start of 2013. The starting point for the benchmarks “shall be the average performance of the 10 % most efficient installations in a sector”, to quote the directive.

Yet the steel benchmarks for primary steelmaking set by the Commission are not based on this rule. The Commission did not assign the full carbon in unavoidable waste gases to the steel benchmarks, despite there being specific provisions in the directive for the use of recovered waste gases for electricity generation due to their substitution of primary fuels saving millions of tonnes of CO2 emissions. The benchmarks are therefore technically unachievable and, as a consequence also now disincentivise investment in the recovery of unavoidable waste gases. In addition, the Commission did not, in setting the benchmarks, use data provided by the industry in accordance with the directive but rather relied on literature on best technologies which did not reflect the technical realities of the industry, further skewing the benchmarks and increasing the financial burden.

The resulting additional costs for the EU steel industry will be about EUR 5 billion over the third trading period (2013 to 2020) on top of the EUR 6 billion already resulting from the best performer benchmarks and on top of the over EUR 12 billion of costs for primary and secondary steelmaking due to ETS-related increases in electricity prices.

Any further tightening of the ETS by increasing the reduction targets or holding back of allowances from the system could easily double the additional costs as well as the total costs.

As a consequence the European steel industry, through EUROFER, has instructed its lawyers to initiate a request for annulment of the Commission decision on the steel benchmarks.

Represented by EUROFER, the European steel industry is a world leader in its sector, with a turnover of EUR 190 billion and direct employment of 420 thousand highly skilled people, producing 200 million tonnes of steel per year. More than 500 steel production and processing sites in 23 EU member states provide direct and indirect employment and a living for millions of European citizens.

The European steel industry is the backbone of Europe’s prosperity and an indispensable part of numerous European supply chains, developing and manufacturing in Europe thousands of different, innovative steel solutions. The European steel industry provides the foundation for innovation, durability, CO₂ reductions and energy savings in applications as varied and vital as automotive, construction, machinery, household goods, medical devices and windmills.

Steel is 100% recyclable – it can be recycled over and over again without loss of properties. All the steel in collected end-of-life products is recycled, irrespective of the percentage of steel in the products. Steel therefore contributes significantly to the long-term conservation of fundamental resources for future generations. About 45% of total EU steel production is recycled steel scrap.