Raising the EU climate target must not slow down the green steel production

by Hans Diederichs

Today, the President of the EU Commission, Ursula von der Leyen, announced an increase in the European climate target of a 55 percent reduction in greenhouse gases by 2030 compared to 1990. "Through green steel production and sustainable products, the steel industry can make a significant contribution to achieving the EU climate target for 2030. However, this will require huge investments in low-CO2 technologies, for which suitable political framework conditions must first be created. On the one hand, there is a need for positive investment incentives through comprehensive financial support and the development of a hydrogen economy and the necessary energy infrastructure. On the other hand, international competitive disadvantages must be prevented which would lead to carbon leakage, i.e. the relocation of industrial production as a result of high energy and climate-related costs to other countries with significantly higher CO2 emissions", explains Hans Jürgen Kerkhoff, President of the German Steel Federation.

In particular, a target increase must not trigger further tightening of EU emissions trading. "From today's perspective, the industry will already be short of around 20 percent of the required emission certificates in the period from 2021 to 2030. A further curtailment of free allocation would drastically increase CO2 costs and massively reduce the scope for investment. The transformation of the industry would then be slowed down", Kerkhoff continued.

In order to maintain the international competitiveness of the steel industry in Europe, the introduction of a border adjustment can also be useful. However, a sufficient supply of free certificates remains indispensable to remain competitive until the new production processes are established on the market. Contrary to what is apparently currently being planned by the EU Commission, a climate tariff must therefore not replace these existing instruments to ward off carbon leakage but must complement them sensibly.

Source : WV Stahl              Photo: Shutterstock

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