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EU Decarbonisation Policies Could Cost UK Steel Industry £300 Million A Year

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Edie News

The EU emissions trading scheme (ETS) could cost the UK steel sector more than £300m a year by 2030, according to a new report from the industry.

Trade body UK Steel and trade union Community have issued a joint warning about the need for reform of decarbonisation policies, particularly the EU’s flagship policy, the ETS.

If left unchanged, the EU ETS will reportedly add nearly £30 a tonne to average steel production costs by 2030.

“This could be disastrous to an industry in which contracts can be won or lost on as little as £5 per tonne of steel,” said the report. “At today’s production levels, it would cost the UK sector as a whole more than £300 million a year.”

Reform

The European Commission will publish this week a series of reform proposals for the ETS, and the UK steel industry has laid out its own series of recommendation, to help “level the playing field”.

It calls for small emitters to be removed from ETS entirely, with opt-out options for sites with annual emissions below 50,000 tonnes CO2e a year.

The paper also calls for more innovation funding and an ETS innovation fund that “really works for industry”.

UK Steel director Gareth Stace said: “The steel sector employs around 30,000 people, many in areas of relatively high unemployment, and contributes more than £45bn to the UK economy. And yet it is a sector under extreme stress.

“Surplus production capacity in the global market, unfair trade practices, a strong pound, high energy costs and regulatory pressures such as the EU Emissions Trading System are all making it hard for UK plants to compete.”

Offshoring

In an interview with edie earlier this year, EEF’s Susanne Baker, warned that large UK manufacturers could be forced to move their operations overseas if decarbonisation continued to be a competitive disadvantage in the UK.

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