Three of Europe’s largest steelmakers say the EU’s carbon market will push the cost of making steel up by around 50% by the early 2030s. ArcelorMittal Europe, thyssenkrupp Steel and voestalpine put the figure in a joint call for urgent, pragmatic reform of the Emissions Trading System, the ETS. Together they account for around 60% of Europe’s integrated steel production.
Without changes, they warn, the current trajectory “risks destroying Europe’s industrial base.” ArcelorMittal executive chairman Lakshmi Mittal set out the shared position in an article in the Financial Times.
Jobs on the Line
The companies estimate that if the ETS goes unreformed, the EU could see a 30-40% decline in steel-intensive manufacturing activity. They put up to 5 million jobs at risk across the value chain. They add that this outcome would cut against the Industrial Accelerator Act, which aims to raise manufacturing’s share of GDP to 20%.
All three firms say they back Europe’s climate goals and have committed to decarbonising. Their objection is to the way the ETS works for heavy industry. It has helped cut power-sector emissions by about 49% between 2005 and 2023, they note, but it does not yet offer steel a workable path. Several things that would make decarbonisation pay are either underdeveloped or unavailable at scale: competitive electricity prices, affordable green hydrogen, Carbon Contracts for Difference, carbon capture and storage, and lead markets for low carbon steel.
Two features of the system worsen the squeeze. Steel-intensive imports face no equivalent carbon cost, and EU steel exports get no rebate to recover what they have paid.
What They Ask For
The companies set out three requests:
A temporary pause in ETS cost escalation, holding costs at today’s level until the enablers are in place.
A framework that supports first movers so early decarbonisation projects can go ahead, with ETS revenues directed to industrial decarbonisation.
A balanced approach to import and export competitiveness.
They call the recent Carbon Border Adjustment Mechanism and the coming Tariff Rate Quotas important steps toward a level playing field, but say ETS reform is the final piece.
Marie Jaroni, CEO of thyssenkrupp Steel, said: “The ETS needs a reality check.” She argued a cost pause would protect the transformation and keep “first movers” from being put at a disadvantage.
Herbert Eibensteiner, CEO of voestalpine AG, said his company is making significant investments through its greentec steel program. The phase-out of free allocation, he said, is already diverting money needed for the decisive phase of transformation.
Mittal framed it as a choice of strategy. “The choice they face is not between climate ambition and competitiveness,” he said. “The choice is between a climate strategy that strengthens Europe’s resilience and economic security, and one that hollows it out.”
