CO2 Targets

Steelmakers Blast Brussels

And you thought your office got hot. Source: DPA
  • Why it matters

    Why it matters

    As one of the largest emitters of greenhouse gases, the steel industry is particularly at risk from European Union climate goals.

  • Facts

    Facts

    • The steel industry in Europe has annual sales of €170 billion.
    • E.U. plans call for the steel industry to cut its CO2 emissions in half.
    • New emission-reduction technologies will only bring a 15 percent reduction in CO2.
  • Audio

    Audio

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Robrecht Himpe has dedicated his life to steel. He has spent 23 years in the business, which has already undergone dramatic change. Many of the blast furnaces and steel smelters have closed in recent years. Most of them were outdated or simply no longer required due to falling demand.

But Mr. Himpe now fears for the survival, at least in Europe, of the traditional industry. The Belgian is the chief technology officer at the global market leader, ArcelorMittal, and also president of the European steel association Eurofer. As a lobbyist, warning the European Commission against putting the industry at a disadvantage is part of his job.

Mr. Himpe prefers quiet persuasion to loud theatrics. If the European Union insists on reducing CO2 emissions, as it is now, then the 56-year-old tries to make his case with factual arguments.

“We must invite the members of the E.U. Commission into our factories and show them that we are a clean and safe industry,” Mr. Himpe said in an interview with Handelsblatt. The steel industry is a high-technology sector, and Europe should not lose its global advantage in the field, he said.

Shuttering the smelters would have far-reaching consequences for the industrial base in Europe.

That could be threatened if the commission, the European Union’s executive arm, were to implement its plan to cut the industry’s free allotment of CO2 certificates starting in 2020. These certificates allow for the emission of the gases that are the significantly responsible for climate change. In the future, the steelmakers will have to buy up to 50 percent of their certificates on the market, Mr. Himpe warned.

Many industry representatives understand that the factories need to lower their CO2 emissions. ArcelorMittal, ThyssenKrupp and Tata Steel are researching new technologies along these lines. “But this can help us achieve a maximum of 15 percent savings,” Mr. Himpe said.

That won’t fulfill the targets set by officials in Brussels. Their plans call for the steel industry to cut its CO2 emissions in half.

Since this target is unattainable, said Mr. Himpe, the companies must buy the necessary certificates on the markets. That would make each ton of steel significantly more expensive. “We see the E.U.’s deliberations presenting a strong risk of additional burdens of €70 billion to €100 billion ($88.5 billion to $126.5 billion) from 2020 to 2030 for the entire European steel industry,” Mr. Himpe said.

That would mean steel producers would have to shoulder up to an additional €10 billion in costs per year at a time when the situation is already anything but rosy. “For most companies, it would not be possible to bear this additional burden,” Mr. Himpe said.

Since most producers are already sustaining losses, many would likely go under. Shuttering the smelters would have far-reaching consequences for the industrial base in Europe. With 500 locations and annual sales of €170 billion, steel is one of the pillars of industrial production in Europe.

Because the manufacturers of cars, machines and wind turbines cannot import steel over thousands of kilometers from China or the United States, many sectors would simply move to other countries.

Ahead of an E.U. summit next week with climate policy on the agenda, Mr. Himpe is campaigning for a moderate path: limiting certificates, so that only the factories belching out the most CO2 are burdened. “The best plants should receive free allowances and the others should gain an incentive to improve,” he said.

 

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The author covers the steel industry for Handelsblatt. To contact the author: murphy@handelsblatt.com

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