EUROFER urges slower withdrawal of free ETS allowances as steel carbon bill threatens to surge

EUROFER says the planned reduction in free allocation is too rapid and proposes a slower phase-out over the next five years, followed by faster withdrawal once conditions supporting industrial decarbonisation are in place. The association argues that carbon pricing must be accompanied by competitive low-carbon energy, trade protection, lead markets, scrap access and investment support. Its position concerns a proposed ETS revision, not a measure established as finally adopted in the supplied claims.

• EUROFER projects the sector’s annual carbon bill at approximately €8.2 billion in 2031, up by roughly €4.8 billion from about €3.4 billion in 2026.
• It estimates carbon costs for conventional blast-furnace steel could reach around €100 per tonne in 2030 and exceed €200 per tonne from 2031.
• Investment decisions have been taken for around 35 million tonnes of low-carbon steel projects, while projects representing more than 10 million tonnes of capacity have stalled, according to EUROFER.
• EUROFER says the EU lacks an effective structural solution to protect steel exports from carbon leakage because European producers bear carbon costs on all output, while foreign producers face EU carbon costs only on sales into the EU.

Watch whether EU policymakers alter the proposed timetable for withdrawing free allowances, and whether they introduce stronger export carbon-leakage protection or wider support for low-carbon energy, investment, scrap access and steel demand. Further project delays would indicate that transition costs are continuing to weaken low-carbon investment economics.