On April 4, the European Confederation of Iron and Steel Industries (EUROFER) said it would challenge at the European Court of Justice the European Commission (EC) decision on steel benchmarks under the European Emissions Trading System (ETS), once adopted in mid-April.
"The (ETS) directive requires that best performers in carbon leakage sectors...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.
EUROFER says that the steel benchmarks for primary steelmaking set by the EC do not properly implement the directive requirement of 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 percent most efficient installations in a sector," EUROFER said.
According to EUROFER, the EC 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 tons of CO2 emissions. The benchmarks are therefore technically unachievable and, as a consequence, also now disincentivize investment in the recovery of unavoidable waste gases. In addition, the EC 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 €5 billion over the third trading period (2013 to 2020) on top of the €6 billion already resulting from the best performer benchmarks and on top of the over €12 billion of costs for primary and secondary steelmaking due to ETS-related increases in electricity prices, EUROFER added.
"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," reads EUROFER's statement.
EC aims to reduce CO2 emissions to 20 percent below 1990 levels over the next decade. Its main tool for doing that is its ETS, which forces companies to buy permits for each ton of carbon they emit.