EU Will Pitch Green Steel as Key Pillar of Industrial Revival
(Bloomberg) -- The European Union will put so-called green steel at the center of its pitch to revive the continent’s industrial fortunes as it comes under pressure to stay competitive with the US and China.
The European Commission, the bloc’s executive arm, will look to spur uptake of low-carbon steel by introducing voluntary certification programs and creating fresh sources of demand via public procurement and the automotive sector under its Industrial Accelerator Act due next week, according to a draft seen by Bloomberg.
Under the draft proposals, steel will be classified according to the emissions generated during its manufacture, with the exact thresholds to be laid out a later date. Governments will be required to ensure that 25% of steel used under public procurement and subsidy programs is low-carbon. The use of scrap steel and electric arc furnaces, or green hydrogen are seen as key decarbonization technologies for the sector.
The bloc will apply similar rules for aluminum and cement. The European Commission didn’t immediately respond to a request for comment.
Explainer: ‘Green’ Steel Is Hard to Make. Is It Even Viable?
“Among energy-intensive industries, steel and cement are priority sectors, as they are the largest emitters and together account for more than 6% of the Union’s annual greenhouse gas emissions,” the draft document, which is still subject to change, says. To avoid the risk of de-industrialization, “low-carbon demand-side measures should be combined with Union origin requirements to adequately support the transition of such industries.”
The low-carbon steel push comes as the EU tries to halt an industrial decline that it attributes to high energy costs, excessive regulation and cheap imports. The Industrial Accelerator Act — dubbed the “Made in Europe” act — will aim to ensure that manufacturing accounts for 20% of Europe’s economic growth by 2035.
EU leaders met in Belgium last week, with one of the most contentious issues being the degree to which the continent protects its own industry from foreign competition. German Chancellor Friedrich Merz and French President Emmanuel Macron played down their disagreements over the issue, with the latter being one of the most forthright in his views that the EU should do more to ensure that critical industries are better insulated against global rivals.
The law will propose a swathe of new conditions to ensure local companies are prioritized when investment decisions are made in the region by member states and foreign firms, Bloomberg previously reported. It upends a free-trade philosophy that has governed decades of policy.
Under the latest draft, “made in Europe” criteria will include production in the EU’s 27 member states, as well as from “trusted partners,” such as third countries that have free trade agreements with the bloc and deemed to be in line with security and resilience objectives.
The automotive sector is being touted as an important buyer of green steel that’s been produced in Europe. In December, the European Commission proposed overturning its combustion engine ban, so that a certain proportion of emissions cuts could instead be achieved through the use of low-carbon steel.
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