Climate Change: Expectations of the European Steel Industry on the results of the Copenhagen Climate Change Negotiations - 26 November 2009

The European steel industry is committed to play its part to reduce greenhouse gas emissions in the Community by at least 20 % by 2020 compared to 1990. Our industry has already made a substantial contribution to achieving this objective by its reduction of CO2 per tonne of production. The available steel production technologies are now near their limits. However, the EU steel industry is committed to further reduce its CO2 emissions in the framework of a global level playing field and to invest into research on breakthrough technologies (e.g. ULCOS programme - “Ultra Low CO2 Steelmaking”).
Our sector is operating under the most stringent climate change policy regime worldwide while at the same time being exposed to fierce international competition.
Any International Agreement, or sectoral agreement as part of it, must therefore meet basic criteria in order to secure a level playing field, preserve the competitiveness of the EU industry, and prevent carbon leakage:

• equal treatment of the European industry and their competitors through similar measures with equivalent effects – globally traded goods must have a level playing field,
• common quantitative targets for all steel producers expressed as emissions per reference product.
• participation of a critical mass of global steel production of at least 85% (China alone accounts for more than 50% of global CO2 emissions from steel),
• an effective international monitoring and verification system,
• a binding dispute settlement regime and clear sanctioning rules,
• a harmonised GHG assessment methodology for all sectors, which provides for comparability, preferably in the form of an ISO or/and CEN standard,
• protection of intellectual property rights for technology dissemination and deployment,
• crediting mechanisms which offer incentives for know-how transfer and which must not degenerate into direct subsidisation schemes of the competition; in this respect especially the “Sectoral Crediting” mechanism must be scrutinised.

The above criteria are essential to secure the competitiveness of the EU steel industry which has been recognized by the European Commission as being exposed to the risk of carbon leakage.
If these criteria are not met by the International Agreement, or sectoral agreement as part of it, the EU must secure that

• free allowances based on achievable benchmarks provide 100% of the needs of the best performing European steel installations
• border adjustment or other measures may be applied in addition to free allowances, if the latter is not sufficient to restore a global level playing field.