News » Revised EU ETS state aid guidelines published
Revised EU ETS state aid guidelines published
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The European Commission published, on 21 September 2020, its revision of the EU ETS State Aid guidelines for the compensation of indirect carbon costs for the period 2021-2030. These revised guidelines are designed to support sectors that, like steel, are most at risk of carbon leakage.
The publication follows the recent Commission’s proposal on increasing the 2030 climate targets. In the absence of comparable efforts by trading partners, it is important to develop a strengthened framework of measures to address the risk of carbon leakage, with benchmark-based free allocation and indirect costs compensation, as well as an effective carbon border adjustment mechanism
Compensation for indirect costs incurred by the steel industry is an essential measure to mitigate the risk of carbon leakage due to the carbon costs passed on to the steel sector from the energy sector.
EUROFER has the following overall perspective on the revision:
The European steel sector is committed to emissions reduction, and compensation for indirect carbon costs forms an essential part of the policy framework necessary to ensure that the sector can continue to decarbonise whilst remaining globally competitive.
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Brussels, 25 July 2024 – Major indicators in the European steel market show a steeper-than-expected downward trend, further impacting the outlook for this year and the next. Poor demand conditions, driven by ongoing factors such as high energy prices, persistent inflation, economic uncertainty and geopolitical tensions, are exacerbated by a manufacturing crisis affecting the largest steel-using sectors, including construction and automotive. According to EUROFER’s latest Economic and Steel Market Outlook, apparent steel consumption is further deteriorating. After a slump (-3.1%) in the first quarter of 2024, its rebound for the full year has been revised downwards (to +1.4% from +3.2%), as well as for 2025 (+4.1% from +5.6%). Similarly, output in steel-using sectors, after a decline in the first quarter (-1.9%), is projected to experience a deeper-than-expected recession (-1.6% from -1%). A recovery is anticipated only in 2025 (+2.3%). Steel imports continue to show historically high shares (27%).