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 U.S. and China. The production of steel contributes significantly to climate change.
The European Commission, the bloc’s executive body, will try to encourage more use of low-carbon steel by certifying it and by stimulating demand through government buying and use in 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 procured publicly and with subsidy programs is low-carbon. Using scrap steel and electric arc furnaces, or those that burn green hydrogen are seen as key ways that steel can be produced with lower carbon emissions.
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?
Steel and cement are priority sectors, since they are the largest industrial emitters and together account for more than 6% of the European Union’s annual greenhouse gas emissions, the draft document said. It is still subject to change.
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 — aims to ensure that manufacturing accounts for 20% of Europe’s economic growth by 2035.
The law will propose a swath 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 are deemed to be in line with security and resilience objectives.
The automotive sector is being touted as an important buyer of green steel that has 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.
Ainger writes for Bloomberg.
