ArcelorMittal, ThyssenKrupp and Voestalpine call for pragmatic ETS reform

ArcelorMittal, ThyssenKrupp Steel and voestalpine have jointly urged the European Union to reform its Emissions Trading System (ETS), warning that rising carbon costs could undermine the competitiveness of European steelmaking and delay investments in low-carbon production technologies.

In a joint initiative outlined in an article published in the Financial Times, the three steelmakers – which together account for around 60% of Europe's integrated steel production – argue that the current ETS framework is no longer aligned with the economic realities of industrial decarbonization.

Steelmakers warn of rising costs

According to the companies, key enablers for cost-effective decarbonization, including competitively priced renewable electricity, affordable green hydrogen, carbon contracts for difference and carbon capture and storage, are not yet available at the required scale.

They estimate that, under the existing ETS rules, steel production costs in the EU could increase by around 50% by the early 2030s. Without reform, they warn, Europe could see a 30–40% decline in steel-intensive manufacturing activity, putting up to five million jobs at risk across the value chain.

Call for temporary pause in ETS cost escalation

The companies are proposing a temporary pause in the escalation of ETS costs until the necessary framework conditions for economically viable decarbonization have been established.

Marie Jaroni, CEO of ThyssenKrupp Steel, said: "The ETS needs a reality check. It does not reflect the current state of Europe’s industry, where competitiveness and transformation are becoming increasingly difficult to reconcile. That is why we need a cost pause in the ETS to safeguard the transformation and ensure that ‘first movers’ like us are not put at a disadvantage."

Herbert Eibensteiner, CEO of voestalpine AG, added: "A pause in the ETS framework, until enabling conditions are in place, is essential to safeguard these investments and enable further decarbonization steps."

Lakshmi Mittal, Executive Chairman of ArcelorMittal, also emphasized the need for reform, stating: "A future for the ETS that incentivises decarbonisation without compromising competitiveness must be found."

CBAM and quotas not sufficient

The companies acknowledge that the introduction of the Carbon Border Adjustment Mechanism (CBAM) and upcoming tariff-rate quotas are important measures to strengthen the competitiveness of European steel producers. However, they argue that ETS reform remains necessary to ensure that decarbonization efforts do not lead to industrial decline.

The three steelmakers say ETS revenues should increasingly be directed toward industrial decarbonization projects and that the framework should support companies investing early in low-carbon steelmaking technologies.

Source: ArcelorMittal, ThyssenKrupp Steel, Voestalpine Photo Fotolia