The European Steel Association (EUROFER) has welcomed a compromise reached by three major political groups in the European Parliament on carbon emission standards for cars and vans, which includes incentives for European automakers to use low-carbon steel produced in the EU.
The agreement, reached by the European People's Party (EPP), Socialists and Democrats (S&D), and Renew Europe, proposes an 87.5 percent reduction in vehicle carbon emissions by 2035 compared to 2021 levels, while allowing qualifying low-carbon steel produced in the EU to contribute up to an additional 7.5 percent toward compliance with the targets.
According to EUROFER, the proposed mechanism would help create demand for low-carbon steel and support the decarbonization of Europe's steel and automotive industries.
European steelmakers plan over 20 million mt of additional low-carbon automotive steel capacity
EUROFER stated that more than 60 major low-carbon steel projects are currently planned or underway across Europe. Together, these projects could provide over 20 million mt of additional low-carbon automotive steel production capacity by 2030, sufficient to supply all vehicles registered annually in the EU.
Axel Eggert, director general of EUROFER, emphasized the importance of creating a market for low-carbon steel as European producers invest in decarbonizing their operations. According to the association, approximately 800 kg of a vehicle, representing 40-50 percent of its weight, consists of steel, while iron and steel account for an estimated 16-27 percent of emissions associated with vehicle production.
EUROFER calls for dedicated steel incentives and EU origin requirements
EUROFER stressed that the proposed credit should remain exclusively dedicated to low-carbon steel rather than being extended to other low-carbon materials. The association argued that separate incentives could support other materials without weakening the demand signal needed for the transformation of steel production.
The association also welcomed the proposed "Made in the EU" requirement, under which only low-carbon steel melted and poured within the EU would qualify for the credit. According to EUROFER, this requirement would ensure that the incentive supports steelmaking activities within the EU rather than products manufactured elsewhere and subsequently processed in the bloc.
The European Parliament is expected to vote on the proposal later in 2026, ahead of negotiations with the European Commission and the Council of the EU.
EUROFER has called for the dedicated low-carbon steel credit and the EU origin requirement to be maintained in the final agreement.
