Steel industry backs EU energy push

The European Steel Association (EUROFER) welcomes the European Council conclusions adopted 19 March that recognises affordable energy is essential to competitiveness, decarbonisation ambitions and Europe’s industrial future. However, the steel sector warns that unless the response measures are designed and implemented effectively, they risk falling short of delivering both immediate relief and the structural changes needed to protect Europe’s industrial base.

“The EU Member States have set the right direction, but the quality and speed of delivery is now the real litmus test,” said Axel Eggert, Director-General of EUROFER. “Even as Europe invests in low-cost renewables, the crisis in the Middle East shows how exposed industry remains to fossil-driven price spikes. Without competitive electricity costs of around €50/MWh, Europe’s energy-intensive industries cannot compete globally and deliver the energy transition.”

EUROFER fully supports the European Council’s Conclusions which include a call to accelerate the deployment of renewable and low-carbon energy, as well as energy storage, but stresses that the benefits of this transition must be passed on to consumers as quickly as possible. The association also welcomes the call for targeted short-term measures addressing all components of the electricity bill and a coordinated EU response to rising energy prices.

The sector further supports the expansion of the combined use of long-term instruments such as Power Purchase Agreements (PPAs) and Contracts for Difference (CfDs). EUROFER stresses in particular that energy-intensive industries should be able to access part of publicly supported electricity generation at cost of production plus a fair margin, in line with the Draghi proposal - something current EU rules do not yet allow.

In line with the Council’s Conclusions and the letter by European Commission President von der Leyen (16 March), the current state aid framework should be made more flexible by removing restrictions on the cumulation of CISAF with ETS indirect cost compensation and by extending the duration of support.

At the same time, EUROFER warns that the absence of a comprehensive assessment of electricity market design, in particular the role of fossil fuels in setting energy prices, raises serious concerns about the EU’s ability to shield industry from ongoing volatility and deliver a meaningful decoupling of electricity prices. The EU must address a structural flaw whereby, even when industry invests to decarbonise and switches to clean electricity, prices still reflect fossil-fuel-based generation. Companies therefore avoid direct carbon costs, yet still pay them indirectly through electricity bills undermining both competitiveness and the business case for decarbonisation.”