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An EU industrial policy providing a strong business case for green investment in Europe
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A thriving European steel industry is crucial for the EU’s strategic autonomy and resilience. However, over the past decade, the EU has shifted from being a net steel exporter to a major net steel importer, losing 30 million tonnes of sales on the EU and export markets. Additionally, the EU steel industry has lost 26 million tonnes of steel production capacity and 25% of its workforce.
The EU is facing a new global reality. To ensure that the EU remains competitive in the middle of the greatest transformation of the industry towards climate-neutrality, it is essential to adopt disruptive thinking and innovative measures. Otherwise, competitors such as the US and China are likely to create a more attractive investment and production environment for green steel, further threatening the EU’s strategic autonomy. The US Inflation Reduction Act (IRA) alone will provide at least USD 85 billion of funding for steel production and upstream energy requirements.
Steel is essential for a climate-neutral economy. Renewables, hydrogen, wind and electric vehicles, are all dependent on steel. It is estimated that more than 74 million tons of steel will be required for the expansion of renewable energy generation alone, demonstrating that the foundations of the Net-zero Age are made of steel. A successful EU industrial policy requires a value chain-based approach, with steel at the core of the Green Deal Industry Plan and as an integral part of the Net-Zero Industry Act. To transition steel and other energy-intensive industries towards carbon neutrality and enhance circularity while ensuring the EU industry’s competitiveness is protected, the following enabling conditions are indispensable:
1. Access to sufficient and globally cost-competitive fossil-free energy and primary and secondary raw materials such as steel scrap, which is strategic.
2. Better tailored, more certain, clear and flexible funding and financial incentives across the EU are required, as well as faster processing of applications. Increased support for the roll-out of low-carbon steel projects rather than for research and innovation is necessary.
3. Establishment of lead markets for green steel and products (including low-CO2 steel); this could be achieved through public procurement, quotas, ambitious GHG thresholds or introduction of GHG pricing for final products based on their lifecycle emissions.
4. Trade policy that levels the playing field with global competitors:
It is also essential to prioritise and mainstream industrial policy and competitiveness while reducing regulatory burdens in all policy initiatives and legislative proposals, ensuring long-term predictability.
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Brussels, 05 September 2024 – The latest developments in the steel sector and across critical value chains are worrying signs of a steady deterioration, endangering the survival and the transition of steelmakers and their key manufacturing customers in Europe, such as automotive. A Clean Industrial Deal including swift and radical measures in EU industrial, energy and trade policies, is the last chance to ensure Europe’s prosperity and shield European industry from cheap imports driven by third countries’ unfair trade practices, overcapacity and lower climate ambition, urges the European Steel Association.
Brussels, 25 July 2024 – Major indicators in the European steel market show a steeper-than-expected downward trend, further impacting the outlook for this year and the next. Poor demand conditions, driven by ongoing factors such as high energy prices, persistent inflation, economic uncertainty and geopolitical tensions, are exacerbated by a manufacturing crisis affecting the largest steel-using sectors, including construction and automotive. According to EUROFER’s latest Economic and Steel Market Outlook, apparent steel consumption is further deteriorating. After a slump (-3.1%) in the first quarter of 2024, its rebound for the full year has been revised downwards (to +1.4% from +3.2%), as well as for 2025 (+4.1% from +5.6%). Similarly, output in steel-using sectors, after a decline in the first quarter (-1.9%), is projected to experience a deeper-than-expected recession (-1.6% from -1%). A recovery is anticipated only in 2025 (+2.3%). Steel imports continue to show historically high shares (27%).
Third quarter 2024 report. Data up to, and including, first quarter 2024