Assessment of the proposal for the fourth review of the European Union Emissions Trading System (EU ETS) has revealed that the cumulative financial burden of the proposed changes would almost wipe out the industry’s margins, according to the European Steel Association (EUROFER).
“The report has shown that the projected cost for the steel industry of the proposal would be €34 billion for the post-2020 period. The report finds that by 2030 the sector would face a shortage of 48 percent in free allowances for direct emissions, and that 76 percent of indirect carbon costs would not be covered by financial compensation,” said EUROFER director general Axel Eggert.
“This staggering €34 billion figure equates to almost €30/mt of crude steel by 2030. Given that the steel industry’s average EBITDA has fluctuated around €35 over the past few years, this proposal can only be expected to destroy the industry’s economic viability. Given fierce global competition and surging imports resulting from worldwide overcapacity, the industry will be unable to pass on these unilateral costs,” emphasized Mr Eggert.