Shaping a sustainable society for generations to come
The European Commission’s proposals for new Climate Law will enshrine in law a target of a 55% reduction in CO2 emissions by 2030 (compared to 1990) which will be a big step in the EU becoming climate neutral by 2050.
These targets are in line with our own ambitions and we see this as a positive development.
These proposals, launched on July 14 as part of a so-called ‘Fit for 55’ package, are incredibly important for our company in mainland Europe because they will determine the conditions for doing business in the EU for years and decades to come. They will also influence the direction of policy development in the UK.
The measures included in the package will increase our costs in the short-term and continue to add cost in the mid-term if we continue to operate as we do now. In particular, the proposed tightening of the EU Emissions Trading System with free allocation of emissions allowances reduced dramatically over time presents a huge challenge.
We also recognise the measures in the package that aim to support our decarbonisation transition. These include proposals for a carbon border adjustment mechanism (CBAM) to create a fair trading environment in the European Union, recognising that many of our competitors outside Europe operate in countries that do not have similarly ambitious decarbonisation targets to those of the EU.
A lot of detail still needs to be worked out to ensure these proposals really do create the conditions in which the EU steel industry and its customers can transition to a decarbonised future whilst remaining competitive. The discussions that will now take place in the European Parliament and Council will be extremely important to ensure that.
Whether or not steel exports from the UK to the EU will be subject to the CBAM will depend on the extent to which the UK Emissions Trading System matches the ambition of the EU Emissions Trading System: if the two trading systems remain broadly equivalent the impact is most likely negligible.
These proposals are not laws yet. They will be discussed in the European Parliament and between the Member States of the EU and we expect refinements to be made during this process