COMMUNICATION FROM THE COMMISSION TO THE PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF REGIONS Action Plan for a competitive and sustainable steel industry in Europe
Date: 2013-06-11
Institutions: European Commission
Subjects: climate change, competitiveness, energy efficiency, innovation, international market, iron and steel industry

EUROPEAN 
COMMISSION 

Strasbourg, 11.6.2013  
COM(2013) 407 final 

COMMUNICATION FROM THE COMMISSION TO THE PARLIAMENT, THE 
COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE 
COMMITTEE OF REGIONS 

Action Plan for a competitive and sustainable steel industry in Europe 

EN 

   EN 

 
 
 
 
 
  
 
Contents   

1. 

2. 

2.1. 

2.2. 

3. 

3.1. 

3.2. 

3.3. 

Steel Industry in Europe............................................................................................... 3 

Global Market for Steel and technological Developments .......................................... 3 

Major trends on the world market................................................................................ 3 

Major technological drivers and challenges................................................................. 4 

Meeting the challenges - the Steel Action Plan ........................................................... 5 

The right regulatory framework ................................................................................... 6 

Boosting demand for steel............................................................................................ 7 

A level playing field at international level................................................................... 8 

Access to raw materials.............................................................................................................. 9 

Trade……................................................................................................................................. 10 

3.4 

Energy, climate, resource and energy efficiency policies to boost competitiveness . 12 

Affordable energy prices and supply ....................................................................................... 12 

Addressing climate policy-related issues ................................................................................. 14 

Ensure global comparability..................................................................................................... 15 

Steel sector as a  contributor to climate and resource efficiency goals.................................... 15 

3.5  

3.6  

4. 

Innovation .................................................................................................................. 18 

The social dimension: restructuring and skill needs .................................................. 20 

Conclusions ................................................................................................................ 23 

 
 
 
1. 

STEEL INDUSTRY IN EUROPE 

A strong and competitive steel sector is important for Europe’s industrial base. The EU 
is the second largest producer of steel in the world, with an output of over 177 million tonnes 
of  steel  a  year,  accounting  for  11%  of  global  output.  Steel  also  forms  part  of  a  number  of 
industrial  value  chains  and  is  closely  linked  to  many  downstream  industrial  sectors  such  as 
automotive,  construction,  electronics,  mechanical  and  electrical  engineering.  It  has  a 
significant cross-border dimension: 500 production sites are split between 23 Member States, 
making it a truly European industry.  

Today,  the  European  steel  sector  finds  itself  in  a  very  difficult  situation.  The  ongoing 
economic crisis has led to a marked downturn in manufacturing activity and associated steel 
demand,  which  remains  27%  below  pre-crisis  levels1.  As  a  result,  several  production  sites 
have closed or reduced output with corresponding job losses, with up to 40 000 jobs lost in 
recent  years.  Consequently  the  pressure  to  restructure  and  reduce  production  capacity 
will remain one of the main challenges for this industry in the foreseeable future. 

Significantly, overcapacity is not only a European problem. Steelmaking capacity is expected 
to continue to increase in the next two years2 with the OECD estimating that globally it will 
increase by 118 million tonnes to a level of 2 171 million tonnes by 2014. The European steel 
industry  finds  itself  with  the  simultaneous  effects  of  low  demand  and  overcapacity  in  a 
globalised  steel  market  whilst  at  the  same  time  being  confronted  with  high  energy  prices 
and needing to invest to adjust to the green economy and produce innovative products.. 

The Commission considers it essential that Europe remains an important steel producing 
region for economic, social and environmental reasons as well as for security of supply. 
Following the adoption of the Commission’s 2012 Industrial Policy Communication3, seeking 
to reverse the declining role of industry in Europe from its current level of 15.2% of GDP 
to as much as 20% by 2020, the March 2013 European Council concluded that it will follow-
up the Commission’s work on specific industrial sectors. This Communication represents the 
Commission’s response to the crisis in the steel sector and sets out targeted actions to ensure 
that the operating environment is conducive to a competitive and sustainable steel industry, so 
that it is able to solve the structural problems it faces, compete globally and develop the next-
generation of steel products vital for other key European industries.  

2. 

GLOBAL MARKET FOR STEEL AND TECHNOLOGICAL DEVELOPMENTS 

2.1.  Major trends on the world market 

Since  2000  the  world  market  for  steel  has  been  growing,  driven  by  the  industrialisation  of 
emerging countries. 

The  drive  to  industrialisation  in  Asia  has  made  it  the  region  with  the  world’s  highest  steel 
production and demand. China now dominates global steel output: it accounted for 39% of 
Asia’s crude steel production in 2000; this rose to 71% in 2012. This increase in production 
has resulted in Chinese domestic overcapacity and shifted the country from a net importer– to 

1  
2 
3  

Eurofer Economic and Steel Market Outlook, 2012 
According to announcements made by companies 
COM(2012) 582 final 

3 

 
 
                                                 
the  largest  steel  exporter  worldwide.  The  Chinese  steel  industry  now  accounts  for  almost 
50%4 of global steel production.  

In the US, the surge in shale gas production has improved the competitive position of US 
industry  with  regards  to  energy  costs  and  is  one  of  the  main  reasons  in  attracting  new 
investments in the steel sector. This may signal a turnaround for this sector, and the US may 
soon become a net exporter of steel5, further increasing the over-supply on global markets. 

In  addition,  some  neighbouring  countries  (Russia,  Ukraine  and  Turkey)  have  substantially 
improved  their  steel  production  capacity  and  increased  their  ability  to  supply  the  EU  steel 
market. But an increase in production capacity across many countries is not accompanied by 
an opening of markets. There is in fact an increasing trend to protect domestic steelmakers 
in  the  past  years  such  as  Brazil  and  India6.  Such  measures  hinder  the  development  of  a 
global steel market based on a level playing field. 

In  this  challenging  context  the  EU  steel  industry  succeeded  in  maintaining  its  export  level. 
Since  2010  EU  exports  are  increasing  and  the  EU  has  had  a  trade  surplus  for  the  past  four 
years. The steel trade surplus for 2012 was at 16,2 million tonnes (or 20 billion euros)7. 

Fair  access  to  both  primary  and  secondary  raw  materials  as  well  as  to  the  maritime 
transport  thereof,  at  competitive  market  conditions  is  also  crucial  for  the  sustainable 
development of the steel industry. 

2.2.  Major technological drivers and challenges 

Steel  is  likely  to  remain  a  key  material  of  choice  in  construction  and  manufacturing. 
However,  a  number  of  trends  in  steelmaking  technology  and  steel  use  could  affect  steel 
demand.  Collaborative design and process innovation can be expected to be the key drivers 
for such trends. This is an area where Europe can lead. 

On the demand side, construction of power stations, including on- and off-shore wind farms, 
energy  transmission,  housing  and  the  transport  sector  will  continue  to  provide  windows  of 
opportunities for innovative steel products. 

to  differentiate 

Increasing  the  added  value  of  steel  products,  including  tubes  and  pipes,  is  a  way  for 
their 
steelmakers 
competitiveness.  However,  as  a  recent  OECD8  study  highlights,  high  value-added  steel 
products  still  account  for  a  limited  share  of  steel  demand  with  competition  being  intense  in 
this  segment.  Moreover,  such  steel  production  requires  the  use  of  high-cost  steel  rolling 
processes and heavy investment in research and development (R&D).  

from  competitors  and 

themselves 

increase 

to 

On  the  production  side,  whereas  innovation  remains  key  to  developing  new  products  and 
markets and increasing efficiency, access to and prices of raw materials and energy will, 
inter  alia,  determine  future  trends  and  for  import-dependent  Europe  the  trends  in  these 
prices  look  set  to  continue  rising.  With  regard  to  the  raw  materials  necessary  to  produce 

4  

5  
6 

7  
8 

WorldSteel  Association  2012  statistics,  http://www.worldsteel.org/statistics/statistics-archive/2012-
steel-production.html 
OECD DSTI/SU/SC(2012) 21 The future of steel: how will the industry evolve? (December 2012) 
DECISÃO  CMC  Nº  39/11,  Brazil  increased  import  tariffs  on  100  products,  including  several  steel 
products, but not value-added sheet. The duties were increased from 12% to 25% and are valid for 12 
months, with the possibility of a one-year extension 
These figures are based on the products covered by the prior surveillance system until December 2012 
OECD  DSTI/SU/SC(2012)  12  The  future  of  the  steel  industry:  selected  trends  and  policy  issues 
(December 2012) 

4 

 
 
                                                 
steel, replacing virgin iron ore by recycled scrap (increasing the share of Electric Arc Furnace 
(EAF)) and replacing coking coal by gas (deployment of direct reduced iron (DRI)) could be 
decisive technology trends of the future. 

Climate policies and resource efficiency will be another important driver for technology 
changes. In the short term, an increase in the use of recycled scrap material and diffusion of 
best  available  techniques  (BAT)  could  make  important  contributions  to  meeting  climate 
policy targets and increase the sustainable use of scares resources.  
A  recent  study  by  the  Commission9  showed  that  incorporation  of  BATs  between  now  and 
2022 would provide only a slight reduction in overall total direct energy consumption and 
CO2 emissions if it is assumed that strict investment conditions (short payback periods) are 
applied. However, a further follow up study10 suggests that, with longer payback periods there 
could  be  higher  reduction  potential  by  2030.  Beyond  this,  research  and  successful 
demonstration would be required to further improve the cost-competitiveness of such BATs.  

term.  Currently  used 

technologies  have  already  undergone 

Incremental  improvements  in  terms  of  energy  efficiency  are  expected  in  the  short  and 
significant 
medium 
improvements11  and  plants  using  best  technologies  are  already  operating  close  to  their 
thermodynamic limits. This being said, there are still some areas where improvements could 
be  achieved  so  as  to  make  the  industry  more  resilient  to  energy  costs.  By  reducing  input 
costs,  better  energy-efficiency  can  require  higher  up-front  investments  and  therefore 
policies  should  be  implemented  in  a  way  that  take  into  account  the  impact  on 
competitiveness. Consequently, the Commission will monitor the sectors which are deemed 
to be exposed  to a significant risk of carbon leakage to ensure that the Energy Efficiency 
Directive contributes to the sustainable development of these sectors12.  

A  successful  demonstration  of  breakthrough  technologies  for  CO2  emission  abatement 
including  industrial  carbon  capture  and  storage  (CCS)  is  crucial.  Before  proceeding  to  the 
implementation  phase  there  are  challenges  to  be  overcome  such  as  high  costs  and  public 
awareness and acceptance, as explained in the Commission’s Communication on the Future of 
Carbon Capture and Storage in Europe13. 

3. 

MEETING THE CHALLENGES - THE STEEL ACTION PLAN 

In  order  to  identify  and  assess  the  challenges  facing  the  steel  industry,  a  High-Level 
Roundtable  (HLR)  was  set  up  in  July  2012  by  the  Vice-President  and  Commissioner  for 
Industry and Entrepreneurship, in co-operation with the Commissioner for Employment and 
Social  Affairs.14  The  HLR  served  as  a  platform  for  dialogue  between  the  Commission, 
industry  chief  executives  and  trade  unions.  Representatives  from  the  main  steel  producing 
Member  States  and  from  the  European  Parliament  also  attended  these  meetings.  The 

9  

10  

11 

12  
13  
14 

under 

payback 

different 

Prospective  scenarios  on  energy  efficiency  and  CO2  emissions  in  the  Iron  &  Steel  industry  (2012)  – 
JRC 
The  potential  for  improvements  in  energy  efficiency  and  CO2  emissions  in  the  EU27  iron  and  steel 
industry 
(2013), 
http://dx.doi.org/10.1016/j.jclepro.2013.02.028 
Compared to the year 1980 the use of raw materials for crude steel production in 2008 fell from 2336 to 
2015 kg/tonne (-13,7%) 
Directive 2012/27/EU 
COM (2013) 180 final 
More  information  can  be  found  at:  http://ec.europa.eu/enterprise/sectors/metals-minerals/steel/high-
level-roundtable/index_en.htm 

of  Cleaner  Production 

periods, 

Journal 

5 

 
 
                                                 
Commission  now  proposes  to  address  the  main  challenges  affecting  the  competitiveness  of 
the EU steel industry as follows: 

3.1. 

The right regulatory framework 

European legislation is essential for the sustainable development and proper functioning of 
the  internal  market,  for  investor  certainty  and  predictability  and  for  providing  a  level 
playing field.  
In line with the Commission’s Smart Regulation agenda15, EU legislation must be effective 
and efficient in achieving its objectives. The Commission is determined to identify excessive 
burdens, inconsistencies, gaps or ineffective measures.  

Furthermore, the cumulative effects of  various policies and legislation can have an impact 
on  a  business’  capacity  to  innovate  and  take  investment  decisions.  This  can  in  the  medium 
term  strengthen  competitiveness.  However,  competitors  in  the  global  marketplace  benefit 
from more favourable framework conditions, they may also lead to reductions in investment 
and losses in market share leading to closure or delocalisation.   

In  this  context,  the  Commission  is  carrying  out  a  cumulative  cost  assessment  on  specific 
sectors such as steel or aluminium. Using all instruments within its toolkit, the Commission is 
also  reinforcing  its  analysis  of  the  impacts  on  competitiveness  of  its  new  policy  proposals 
through  the  use  of  "competitiveness  proofing"16  in  the  context  of  its  ex-ante  impact 
assessments.  Additionally, 
is  carrying  out  "Fitness  checks"  as 
comprehensive policy evaluations to assess whether the regulatory framework for a policy 
sector  is  fit  for  purpose.  These  findings  will  serve  as  an  input  for  drawing  conclusions  on 
future policy and regulatory frameworks.  

the  Commission 

The regulatory framework should be designed in a smart and ambitious way so as to be a 
key  driver  for  innovation,  particularly  when  dynamic  and  market-based  approaches  are 
used.  Stricter  environmental  targets,  the  use  of  harmonised  rules,  standards  and  public 
procurement can also provide a major boost for innovation17. 

European  standards  could  also  promote  sustainable  production  of  steel  construction 
products. The steel industry is already developing the Steel Construction Products Mark – 
SustSteel. SustSteel aims to promote sustainability in general, and in the production of steel 
construction products in particular. If it is applied in a sound and credible manner it will have 
the  potential  to  boost  the  market  share  of  such  European  sustainable  steel  construction 
products.  This  should  be  considered  by  Member  States  and  may  require  specific 
standardisation activities. 

Regulatory  concerns  are  also  present  in  the  Member  States.  In  some,  value-added  tax 
evasion in the domestic steel market negatively influences the operational conditions for steel 
producers. Due to this, they suffer from unfair competition  from  the black  market.  In  many 
cases this forces the companies to limit production or stop mills. In some Member States due 

15  
16  

17  

COM (2010) 543 and COM (2012) 746 
Competitiveness proofing is a twelve-step tool addressing the impacts of a policy proposal on enterprise 
competitiveness  through  its  effects  on  the  cost  of  doing  business;  on  the  affected  sectors'  capacity  to 
innovate; and on their international competitiveness. It provides a simple and effective tool to deliver 
more thorough analyses of the impact of proposals on competitiveness - SEC(2012) 91 final 
Innovation Union - COM(2010) 546 final 

6 

 
 
                                                 
to this particular tax evasion, the production and sale of rebar decreased by 15% in 2012 and 
already by 30% this year18.  

The Commission will: 

– 

– 

– 

– 

finalise  the  cumulative  cost  assessment  for  the  steel  sector  in  2013  to  assess  the 
overall regulatory burden, 

continue  to  assess  the  impacts  of  new  initiatives  which  can  be  expected  to  have  a 
major  influence  on  the  competitiveness  of  the  steel  industry  in  its  impact 
assessments, including the use of competitiveness proofing, as appropriate, 

examine the potential of SustSteel to boost the market share of European sustainable 
steel construction products. It may then request specific standardisation activities, 

investigate, together with Member States, possible initiatives against the illegal EU 
market for steel products, including VAT evasion.  

The Commission invites Member States to: 

– 

improve the sustainability of steel construction products by exploiting the possibility 
of introducing SustSteel. 

3.2. 

Boosting demand for steel  

The  world  steel  industry  currently  finds  itself  with  approximately  542  million  tonnes  of 
excess  capacity.  Out  of  this,  almost  200  million  tonnes  are  located  in  China19.  Presently, 
overcapacity is estimated at approximately 80 million tonnes in the EU, compared to EU total 
production capacity of 217 million tonnes. If the steelmaking capacity remains constant after 
2014, it could take five to seven years for demand to match capacity, if demand increases at 
current rates of growth. 

In the EU, steel demand depends on the economic and financial status of a few key steel 
using  industries  –  for  example  the  construction  and  the  automotive  sectors  account  for  a 
combined share of approximately 40% of steel demand. Engineering as well as electrical and 
electronic  equipment  (EEE)  industries  are  also  important  drivers  for  the  steel  industry’s 
prosperity. The financial crisis has however had a substantial negative impact on all of these 
industries.  In  order  to  ensure  recovery  of  these  sectors,  it  is  important  to  implement  the 
current  EU  initiatives  to  support  the  construction  and  automotive  sectors  with  the  view  to 
increasing  their  sustainability,  resource  and  energy  efficiency.  More  growth-oriented 
measures will stimulate the consumption of steel.  

The Commission will: 

18  
19 

20 
21  

Polish Steel Association statistics, 2012 
OECD DSTI/SU/SC(2012) 15 Excess Capacity in the steel industry: an examination of the global and 
regional extent of the challenge 
COM (2012) 636 final 
COM (2013) 17 final and COM (2013) 18 final 

7 

 
 
 
                                                 
– 

the  key  steel-using  sectors,  specifically 

continue  promoting 
the 
Commission’s initiative ‘CARS 2020’20 initiative, inter alia stimulating the demand 
of  alternative  fuel  vehicles21  and 
the  Commission’s  ‘Sustainable 
Construction’22  initiative  to  increase  the  energy  and  resource  efficiency  and 
encourage renovation of the building stock. 

through 

through 

3.3. 

A level playing field at international level 

The  EU  is  an  open  market.  Yet  too  often  non-EU  steel  producing  countries  use  trade 
restrictions  or  distortions  to  give  artificial  advantages  to  their  own  steel  industries.  These 
restrictive  measures  include  tariff  barriers,  non-tariff  measures  (related  notably  to  technical 
regulations and conformity assessment procedures), export incentives and subsidies as well as 
restrictions on different types of steel making raw materials.  

The  EU  addresses  trade  barriers  and  unfair  practices  by  forcefully  implementing  its 
market access strategy with a view to enforcing international commitments and securing a 
level playing field for EU operators in the steel sector.  

Through  an  effective  network  and  adequate  monitoring  tools  -  the  EU  has  identified  key 
trade  barriers  on  third  country  markets  which  have  then  been  targeted  through  appropriate 
enforcement instruments. Examples of such practices listed in the EU market access database 
include the imposition of export restrictions and export duties on raw materials in India, 
China, the Russian Federation and Egypt - among others - which contribute to unduly raise 
steel production costs  in  the  EU. Other  types  of  barriers  in  third  country  markets  target  EU 
products  by  imposing  excessive  licencing  procedures  or  requirements  which  ultimately 
hamper EU steel exports – this practice has been identified in particular on the Indian as well 
as the Indonesian markets. Investment limitations in, and public procurement preferences for, 
domestic  steel  sectors  have  also  been  used  to  protect  domestic  industry  against  EU 
competition notably in China and the US respectively.  

To  meet  such  challenges,  the  EU  engages  with  its  partners  through  carefully  calibrated 
responses  in  the  framework  of  the  market  access  strategy.  The  Indian  mandatory 
certification requirements on certain steel products for example have been waived further to 
EU  demarches  with  the  Indian  authorities  while  dispute  settlement  cases  have  had  to  be 
launched against China on key raw materials such as coke to secure an unhampered supply 
of  this  input  to  the  EU  steel  sector.  Meanwhile,  the  EU  continues  to  address  the  remaining 
obstacles  through  a  well-developed  network  of  consultation  fora  known  as  Steel  Contact 
Groups with the Russian Federation, China, the United States but also Japan, India and 
Brazil. In addition to what can be negotiated in the framework of Free Trade discussions, or 
what  can  effectively  be  addressed  through  the  activities  of  WTO  working  groups,  these 
Contact Groups allow for useful exchanges to identify and bring down the barriers that the EU 
industry still faces on these expanding markets.    

Another major challenge the steel industry has to face, notably in the context of global steel 
overcapacity,  is  the  possible  use  of  unfair  trade  practices  in  third  countries  aimed  at 
exporting excess production through predatory commercial behaviour. The Commission 
addresses  this  challenge  through  application  of  its  Trade  Defence  Instruments  (TDI).  In 
2012  eleven  new  investigations  on  iron  and  steel  products  were  initiated  by  the  European 
Commission  following  complaints  by  the  industry  on  such  unfair  trade  practices.  This 

22  

COM (2012) 433 final 

8 

 
 
                                                                                                                                                         
represents a net increase as compared to the previous year and illustrates both the importance 
of the problem and the determination of the Commission in confronting these practices head 
on. In this process, the Commission must remain vigilant with respect to other partners’ use of 
trade  defence  instruments  which  can  also  be  a  means  to  unduly  limit  the  amount  and  the 
market  share  of  EU  exports  in  order  to  protect  domestic  producers.  In  this  respect  the 
Commission  engages  regularly  with  third  country  authorities  to  ensure  that  WTO  rules  on 
safeguards, countervailing measures and anti-dumping procedures are duly respected.       

Overall,  the  restrictive  measures  that  affect  the  competitiveness  of  EU  steel  producers 
require  that  the  EU  continues  to  apply  with  determination  its  market  access  strategy  to 
ensure fair international competition and a level playing field for the European industry. 

Access to raw materials 

Like  many  other  manufacturing  industries,  steelmaking  depends  on  resources  that  are 
scarce in Europe. Blast furnaces need good quality iron ore and coking coal. Iron ore prices 
have increased significantly in recent years23 due to strong demand from emerging economies. 
Weaker demand for coal in the US, caused by the shale gas boom, has put downward pressure 
on coal prices in the EU which has contributed to lower prices of coking coal, resulting in an 
increase in coal use in the EU.  

Steel  can  be  recycled  again  and  again  without  the  loss  of  key  properties  such  as  strength, 
ductility  or  formability.  Recycling  of  uncontaminated  steel  scrap  can  offset  the  use  of  over 
1200  kg  of  iron  ore,  7kg  of  coal  and  51kg  of  limestone  for  a  tonne  of  steel  scrap  used24. 
Producing steel from scrap steel instead of virgin ore reduces energy inputs by around 75%, 
and saves about 90% of raw materials inputs25. In view of Europe’s challenges in accessing 
low  price  energy  and  raw  materials  it  clearly  makes  sense  to  maximise  the  amount  of  steel 
produced  from  scrap  on  economic  grounds.  The  environmental  imperatives  are  also  strong 
with production from scrap leading to vast reductions in air pollution (around 86%), water use 
(40%)  water  pollution  (76%)  and  mining  waste  (97%)26.  One  tonne  of  steel  produced  from 
scrap reduces CO2 outputs by 231 tonnes compared to virgin ore.  

Increasing  the  amount  of  scrap  recycled  in  Europe  will  require  firstly  better  functioning 
secondary  metals  markets.  This  will  depend  on  the  cost  of  retrieving  metals  embedded  in 
abandoned structures, discarded products and other waste streams and its relation to primary 
metal prices27. In order to facilitate re-use and recycling, environmentally optimised product 
design  should  incorporate  ease  of  dismantling  and  separation  of  all  steel  components.  By 
maximising  recycling,  more  steel  can  be  kept  in  circulation28.  The  Eco-Design  Directive29 
allows  for  the  possibility  to  set  out  requirements  on  the  on  the  recyclability,  dismantling  of 
products  in  a  cost-effective  way,  which  could  contribute  to  ensuring  better  access  to  high 
grade scrap metals.  

Demand  for  recycled  steel  has  already  been  boosted  by  the  extra  confidence  in  its  quality 
generated by the establishment of end-of-waste criteria for iron and steel30.  

23 
24  
25  
26  
27  
28  
29  
30  

Iron ore prices increased from $25 per dry metric t in 2001 to $250 in 2011 
World Steel Association (2010) 
US. Environmental Protection Agency 
US. Environmental Protection Agency 
http://scripts.cac.psu.edu/users/n/w/nwh5089/Steel%20Recycling%20Process.pdf 
www.eurofer.org/index.php/eng/content/.../517/.../SteelRecycling.pdf 
Directive 2009/125/EC 
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2011:094:0002:0011:EN:PDF 

9 

 
 
 
                                                 
Further efforts are required to tackle illegal exports of scrap which are leading to the loss of 
valuable raw materials for the European economy. The Commission will come forward with 
proposals to tackle such illegal exports through strengthening of Member States' capacity for 
inspections  under  the  Waste  Shipment  Regulation31.  Further  work  is  also  needed  on 
monitoring of scrap movements. 

When  considering  production  methods,  attention  should  also  be  paid  to  resource  efficiency 
and the impact on the climate. Roughly 40% of EU steel production comes from Electric Arc 
Furnaces which allow steel to be made from a 100% recycled scrap metal feedstock. Whilst 
this  type  of  production  is  energy  intensive,  the  use  of  scrap  as  the  primary  raw  material 
renders  it  resource  efficient.    As  it  also  results  in  lower  carbon  emissions  if  compared  with 
primary steelmaking from ore, this type of production should be encouraged. However, to do 
so  it  is  necessary  to  have  good  quality  scrap,  obtained  in  environmentally  acceptable 
conditions.  The  Commission’s  raw  materials  strategy32  sets  the  appropriate  framework 
under which this objective should be pursued.  

To  ensure  proper  monitoring  the  Commission  has  identified  a  list  of  14  critical  raw 
materials  which  are  both  economically  important  and  subject  to  a  higher  risk  of  supply 
interruption due to inter alia, the geographic origin of the material. Supply risk may also be 
accentuated by the low substitutability and low recycling rates of the raw material itself. This 
list which contains several materials needed for the production of steel alloys will be reviewed 
in 2013 and coking coal will be considered for inclusion.  

Trade 

Trade is particularly important for steel. Given the indispensable role of trade as a driver of 
economic  growth  in  the  globalised  steel  market,  the  Commission  strongly  supports  the 
liberalisation of international trade under the umbrella of the WTO.  

At  a  bilateral  level,  negotiations  of  trade  agreements,  in  particular  Free  Trade 
Agreements  (FTAs)  are  another  key  instrument  to  achieve  a  level  playing  field  for  EU 
companies  both  in  terms  of  access  to  markets  and  to  raw  materials  under  conditions  of  fair 
competition. To assess the overall impact these agreements have on EU industries and on the 
EU  economy,  each  trade  agreement  is  subject  to  an  analysis  of  the  consequences  of  the 
proposed deal for the EU once negotiations are concluded, in addition to the ex-ante impact 
assessment  undertaken  before  adoption  of  the  negotiating  directives,  and  the  sustainability 
impact assessment carried out during the trade negotiations.  

The  statistical  information  is  important  for  the  sector,  permitting  rapid  analysis  of 
increasingly  volatile  steel  import  trends  and  to  take  the  necessary  initiatives  on  a  strong 
factual base.  

A  scenario  of  rising  imports  will  be  more  likely  if  excess  production  capacities  worldwide 
continue  to  rise  further,  encouraging  recourse  to  subsidies  and  dumping  in  order  to  use 
global excess capacities. Up until  the  end of  2012 an automatic  licence-based  system  (prior 
surveillance)33  provided  timely  information  on  future  steel  imports.  After  the  expiry  of  the 
automatic licence-based system, the EU will continue to remain vigilant and monitor imports 

31  
32  
33 

Regulation (EC) 1013/2006 
COM(2008) 699 and  COM(2011) 25 
Commission Regulation (EU) No 1241/2009 

10 

 
 
 
                                                 
from third countries closely via the dedicated “Surveillance 2”34 system. Several of the EU’s 
trading partners also monitor steel imports some of which, such as the US, through a system 
similar to automatic licensing.  

It is also important to ensure that regulated markets for trading commodity derivatives are 
fair and transparent while applying specific terms in order to support liquidity, prevent market 
abuse,  and  prevent  the  build-up  of  market  distorting  positions.  Different  regulations35  may 
have  an  impact  on  steel  makers,  both  concerning  trading  of  commodity  derivatives  and 
financial instruments. 

The Commission will: 

In the short term 

– 

within its comprehensive trade strategy use its various trade policy tools and 
instruments  (e.g.  trade  negotiations  or  TDI)  to  ensure  European  steel 
producers' have access to third country markets. In this context, 

– 

– 

– 

 take action against unfair trade practices in the steel sector,  

continue  to  provide  timely  reports  on  the  evolution  of  steel  imports 
from non-EU countries,  

continue  to  carry  out  ex-ante  impact  assessments  of  envisaged  FTAs 
before the adoption of trade negotiating directives, as well as an analysis 
of  the  consequences  for  the  EU  of  concluded  FTAs  before  their 
signature, 

monitor scrap markets. Given the reduced amount of CO2 in the production 
of  scrap  in  Europe,  non-discriminatory  measures  justified  on  environmental 
grounds could be envisaged, if necessary to address carbon leakage to non EU 
countries,  provided  that  they  do  not  result  directly  or  indirectly  in  export 
restrictions, 

present  a  legislative  proposal  on  inspections  and  controls  on  waste 
shipments, 

consider the inclusion of coking coal in the list of Critical Raw Materials in 
addition to other key essential elements for steel production, 

engage  with  the  main  non-EU  producing  countries,  in  order  to  have  an 
overview of the sector, its trends and to develop common approaches to the 
challenges that it is facing worldwide. 

– 

– 

– 

– 

In the long term 

34 

35  

The Surveillance 2 system is collecting data directly extracted from import customs declarations. These 
data  relate  to  the  reference  of  the  customs  declaration,  the  nature  of  the  goods,  their  origin,  their 
volume,  their  value  and  their  date  of  acceptance  by  the  customs  administration  (actual  import  date). 
Records are sent daily by the central systems of the customs administrations of the EU Member States. 
It is based on article 308d of the implementing provisions of the Custom Code (Regulation 2454/93) 
Proposal  for  a  Markets  in  Financial  Instruments  Regulation  COM(2011)  652,  European  Market 
Infrastructure Regulation (EU) No 648/2012, Market Abuse Directive 2003/6/EC amended by Directive 
2008/26/EC and Directive 2010/78/EU. MAD is currently under review, COM (2011)654 and Proposal 
for a Market Abuse Regulation COM (2011) 651 

11 

 
 
                                                 
– 

– 

pursue its trade liberalisation agenda through the negotiation of FTAs, with 
a  view  to  eliminate  or  substantially  reduce  tariffs  and  non-tariff  barriers  on 
third-country markets, ensure a sustainable access to raw materials for the EU 
industry, as well as an enhanced promotion of international standards for steel 
products, 

continue to work with the Council and European Parliament, in the context of 
the exercise to modernise the TDI, to swiftly update the basic Anti-dumping 
and Anti-Subsidy Regulations. These changes would allow, inter alia, for the 
imposition of higher duties (a deviation from its ‘lesser duty’ rule) on imports 
from  countries  which  use  unfair  subsidies  and  create  structural  distortions  in 
their  raw  material  markets;  as  well  as  more  effective  tools  for  ex-officio 
investigations  where  a  threat  of  retaliation  exists  against  the  EU  industry 
concerned. 

3.4  Energy,  climate,  resource  and  energy  efficiency  policies 
competitiveness 

to  boost 

Affordable energy prices and supply 

Similarly  to  other  Energy  Intensive  Industries  (EII),  energy  costs  are  one  of  the  main 
competitiveness drivers for the European steel sector. The steel industry estimates that energy 
costs represent up to 40% of total operational costs depending on the segment of the value 
chain36. European industry is faced with higher energy prices than most of its international 
competitors,  a  trend  which  has  been  amplified  by  price  development  dynamics  of  recent 
years.  

Electricity  and  coking  coal  are  the  steel  industry’s  most  important  energy  sources  and  it  is 
under  pressure  with  regard  to  both.  Despite  a  recent  drop,  the  price  of  coking  coal  has 
significantly  increased  over  the  last  years.37  Average  end-user  electricity  prices  for  EU 
industry  are  twice  those  in  the  US38  and  substantially  higher  than  those  in  most  other 
OECD  countries  (with  the  exception  of  Japan)  and  many  major  developing  economies. 
Between 2005 and 2012 European industry faced electricity price increases of on average 
38% in real terms whereas the corresponding figure was minus 4% for the US and plus 16% 
for  Japan.39  As  these  differences  translate  into  impacts  on  the  cost  structures  of  steel 
companies  in  different  regions  and  have  a  direct  effect  on  global  competition  and 
competitiveness, internationally competitive energy prices and secure energy supplies are 
vital  for  the  future  of  the  steel  sector  in  Europe  not  least  because  they  are  important  in 
determining  location  and  investment  decisions  for  the  steel  industry.  The  underlying 
analysis  for  the  Commission's  Energy  Roadmap  205040  suggests  that  electricity  prices  are 
likely to increase during the period up to 2030 to thereafter slightly decline, in large part 
due  to  infrastructure  investment  costs.  It  is  therefore  particularly  important  to  consider 
potential impacts on prices and  costs  when defining future  policies related to energy and to 

36  

37  
38 
39  

40  

Ecorys Study on European Energy-Intensive Industries – The Usefulness of Estimating Sectoral Price 
Elasticities 
Coking coal prices increased from $170 per t in 2009 to $290 in 2011 
International Energy Agency, Quarterly Statistics, 2nd quarter 2012 
IEA: index 2005 = 100, Energy prices and taxes, Quarterly Statistics, 4th quarter 2012. European data 
relates to OECD members only 
COM(2011) 885/2 

12 

 
 
 
 
                                                 
identify ways in which adverse impacts on the competitiveness of energy intensive industries 
can be reduced or compensated. 

End-user  electricity  price  changes  and  differences  between  countries  (including  within  the 
EU) are due to a complex interaction of various factors, including fuel costs, taxation policy, 
market  structure,  changed  approaches  to  price  regulation,  differences  in  climate  and 
renewables policies and a changing structure of power generation. The share of renewables 
in the energy mix has an impact on the price of electricity. While high shares of renewable 
energy  with  low  marginal  costs  can  have  a  downward  pressure  on  wholesale  prices,  the 
impact on end-user prices from expansion of renewable energy can be negative in the short to 
medium  term  through  the  addition  of  renewables  levies  by  Member  States.  It  is  therefore 
important  that  the  cost  of  renewable  energy  comes  down  and  that  national  support 
schemes  are  cost  effective.  The  share  of  taxes,  tariffs  and  levies  set  by  Member  States 
represent  a  substantial  and  in  many  cases  increasing  share  of  end-user  prices.  To  date,  the 
steel  industry  and  other  EII  benefit  in  some  Member  States  from  reductions  or  exemptions 
from such taxes and levies. 

Another  challenge  is  the  ETS-related  increases  of  electricity  prices.  These  costs  can 
however be mitigated by the EU State Aid Guidelines41 which allow for compensation of such 
costs under certain circumstances to prevent carbon leakage.  

The  gradual  completion  of  the  internal  energy  market  has  helped  to  contain  wholesale 
electricity prices and will stimulate competition e.g. by eliminating market entry barriers and 
regulatory obstacles, but its completion is also dependent on the expansion of the capacity of 
cross-border  and  trans-European  energy  infrastructure42.  For  the  internal  energy  market  to 
work,  the  third  energy  package43  must  be  implemented  in  full  by  Member  States.  Other 
important factors to ensure competitive energy prices and costs in Europe include continued 
research  and  innovation  support  to  energy  technologies  from  the  proposed  Horizon  2020 
programme  (particularly  where  these  can  enhance  energy  efficiency,  which  can  play  an 
important role in partially offsetting the energy price gap)44 and continued efforts to diversify 
supply  sources,  routes  and  countries  for  gas  supply.  Development  of  indigenous  energy 
resources  in  a  cost-efficient  manner  –  be  it  renewables,  coal  coupled  with  CCS,  or 
conventional  and  unconventional  fossil  fuels  –  can  also  have  a  positive  impact  on  energy 
prices in the medium to long term. 

The EII are highly capital-intensive with an average investment cycle of 20 to 30 years hence 
they  need  predictability  of  energy  costs  so  as  to  limit  investment  risks.  Long-term 
electricity  contracts  between  suppliers  and  customers,  which  provide  such  planning 
certainty, are possible under EU competition rules. It is only under certain specific conditions 
that  such  contracts  can  result  in  a  foreclosure  of  competition  in  violation  of  the  Treaty45. 
Foreclosure  will  normally  only  occur  in  relation  to  dominant  suppliers  or,  as  a  cumulative 
effect  resulting  from  similar  behaviour  by  multiple  suppliers.  While  allowing  for  different 
individual  contract  durations  and  expiry  dates,  past  Commission  decisions46  require  that 
substantial  volumes  be  returned  to  the  market  every  year,  making  them  available  for 

41  
42 
43 
44  
45  
46  

2009/C 235/04 
COM(2011) 676 
Directives 2009/72/EC and 2009/73/EC, Regulations (EC) No 713/2009, 714/2009 and 715/2009 
COM(2011) 808 final 
Articles 101 and/or 102 TFEU 
Case  AT.  39.386  —  Long  Term  Electricity  Contracts  France (OJ  C  133,  22.5.2010,  p.  5–6)  and  case 
AT.37966 — Distrigaz (OJ C 9, 15.1.2008, p. 8–8) 

13 

 
 
                                                 
contracting by any supplier. Should the Commission case practice provide insufficient clarity 
on  the  competition  assessment  of  such  contracts,  the  Commission  is  prepared  to  issue  a 
Guidance Letter within the meaning of the Commission Notice47, provided that the conditions 
set out in this Notice are respected. 

The European Council of 22 May 2013 recognised that the impact of high energy prices and 
costs  must  be  addressed.  In  this  context,  the  Commission  will  follow-up  on  the  Council 
Conclusions48.  This  precise  monitoring  of  energy  costs  and  their  impact  on  industry  will 
cover the various cost components of energy prices and their evolution over time as well as a 
price comparison between the EU and other main steel producing regions, including data on 
corrective measures such as exemptions and tax breaks.  

In  the  respect  of  differentiated  fiscal  consolidation,  the  European  Commission  recommends 
that  fiscal  adjustments  should  be  more  growth  friendly  both  as  regards  revenue  and 
spending. With regard to the shift to environmental taxes, these can stimulate the development 
of  new  technologies,  promote  resource  efficiency  and  the  creation  of  "green"  jobs  but  the 
impact  of  high  energy  prices  on  households  and  on  competitiveness,  including  energy 
intensive industries, needs to be monitored so that future decisions can be taken on the basis 
of sound evidence49. 

Addressing climate policy-related issues 

The steel industry is one of the largest sources of CO2 emissions50. It is also a sector deemed 
to  be  at  risk  of  carbon  leakage.  Due  to  this  risk,  the  steel  industry  will  in  principle  be 
allocated  emissions  allowances  at  100%  of  the  benchmark  based  value  for  free.  Under  the 
ETS state aid guidelines it may receive financial compensation as from 1 January 2013 until 
31 December 2020, under the ETS third phase. 

As acknowledged by the Commission's Green Paper on the 2030 framework for climate and 
energy  policies51,  energy  and  climate  policies  must  be  implemented  in  a  cost-effective, 
predictable  and  coherent  manner.  Transparency  and  stability  of  the  regulatory  framework  is 
necessary to ensure that long-term investments, indispensable for the renewal of the industrial 
base  take  place  in  Europe,  especially  for  highly  capital-intensive  industries  with  long-term 
investment  periods  (20  –  30  years).  Therefore,  the  EU’s  climate  policy  for  post-2020  will 
consider  how  technological  limits,  barriers  and  opportunities,  the  effects  of  associated  costs 
on competitiveness as well as the commitments and level of ambitions of non-EU countries, 
can best be taken into account. 

The  EU  represents  only  11%  of  global  GHG  emissions  with  this  share  decreasing,  so  that 
effective  international  action  is  required  to  tackle  climate  change.  A  contribution  from  all 
major  economies  and  all  sectors  in  a  comparable,  equitable,  transparent  and  accountable 
manner is vital to achieve the objective. Improved commitments as well as efficient systems 
of monitoring, reporting and verification must be in place to ensure transparency of the future 

47  

48  
49  

50 

51  

Commission's notice on informal guidance relating to novel questions concerning Articles 81 and 82 of 
the EC Treaty that arise in individual cases (informal guidance), OJ C 101/78, 27.4.2004 
EUCO 75/1/12 of 23 May 2013 
Commission Communication, 2013 European Semester: Country specific recommendations – Moving 
Europe beyond the crisis, COM (2013) 350 
It is estimated that between 4 and 7% of the anthropogenic CO2 emissions originate from this industry 
in EU-27, which generated 252.5 million tonnes of CO2 emissions on average during the period 2005 to 
2008 
COM(2013) 169 final 

14 

 
 
 
                                                 
international climate change agreement and internationally recognised standards are essential 
to  improve  the  EU’s  industrial  competitiveness.  It  is  important  to  identify  how  to  finance 
climate  objectives.  The  EU  low-carbon  roadmap  recognised  that  achieving  new  targets 
would  require  additional  investments.52  Application  of  more  advanced  industrial  processes 
and  equipment  would  be  necessary  on  a  broad  scale  after  2035,  because  the  level  of  CO2 
emissions  of  the  most  efficient  steel  plants  in  the  EU  is  close  to  physical  limits  with  the 
technologies currently in place. 

One  option  for  innovative  financing  would  be  the  use  of  some  of  the  revenues  from  the 
auctioning of emissions allowances under the ETS to help finance climate-related objectives, 
possibly  including  the  development  of  new  low-carbon  technologies  across  the  industries 
concerned. From 2013 more than 40% of the total number of allowances within the EU will 
be auctioned and then the level of auctioning will increase in a linear manner with a view to 
reaching 100% by 2027.  

The  EU  is  committed  to  addressing  the  issues  of  competitiveness  linked  to  its  climate 
change policies. Without a level playing field in climate change policy, non-EU steelmaking 
competitors  enjoy  an  unfair  competitive  advantage  that  distorts  the  global  market  for  steel 
and restricts future investment in the EU, which may lead to carbon leakage.  

Ensure global comparability 

Materials  research  and  control  over  raw  material  resources  is  becoming  increasingly 
important  in  the  current  global  competition  for  industrial  leadership  in  low  carbon 
technologies.  Steel  is  a  material  that  has  a  significant  potential  to  enable  the  transition  to  a 
knowledge-based,  low  carbon  and  resource-efficient  economy.53  It  has  an  important  role  to 
play  in  the  development  and  market  roll-out  of  more  efficient,  safe  and  reliable  low-carbon 
and resource efficient technologies. To support the implementation of the EU’s climate policy 
and  to  facilitate  achieving  the  objectives  of  the  UN  Framework  Convention  on  Climate 
Change,  a  mandate  was  given  to  CEN  to  develop  a  European  Standard  to  assess  the 
greenhouse  gas  (GHG)  emissions  in  EII.  Identifying  quantifiable  contributions  to  emissions 
reductions, at plant and industry sector levels, requires transparent methodologies and a solid 
consensus  on  monitoring,  reporting  and  verification  procedures  as  well  as  key  performance 
indicators.  The  standards  will  eventually  allow  the  validation  of  the  methods  of  measuring 
and quantification of process-related GHG emissions, ensure comparability of performance of 
plants globally and enable assessment of their potential for improvement. 

Steel sector as a contributor to climate and resource efficiency goals 

Steel  contributes  to  CO2  reductions  and  energy  savings  in  a  variety  of  applications  such  as 
automotive,  shipbuilding,  construction,  machinery,  household  goods,  medical  devices  and 
windmills.  A  recent  study54  compares  the  CO2  savings  from  innovative  steel  applications  – 
such  as  more  efficient  power  stations,  wind  turbines  or  lighter  vehicles  –  with  the  CO2 
emissions from steel production. The study shows that, in the case of Germany, the savings 
potentials  achieved  through  the  use  of  steel  are  higher  than  the  emissions  from  steel 
production. Steel is fully recyclable without loss of quality. By-products of steelmaking (e.g. 
slag) are almost fully utilised. Therefore with regards to the Europe2020 flagship initiative on 

52  
53 

54  

COM(2011)112 final  
Staff  Working  Document  SEC(2011)1609:  Materials  Roadmap  Enabling  Low  Carbon  Energy 
Technologies 
Boston Consulting Group 

15 

 
 
 
 
                                                 
Resource Efficiency55, the steel industry is well positioned to benefit from an increased focus 
on Life-Cycle Approach (LCA), increase in recycling rates and better use of by-products.  

Another  way  of  meeting  the  challenges  of  reducing  GHG  emissions  is  to  further  strengthen 
the implementation of additional energy efficiency measures in steel making. Many plants 
generate large amounts of waste heat and gas which may be utilised for power generation or 
steam,  to  be  used  either  at  the  facility  itself  as  captive  power  production  or  exported  to 
neighbouring  industries  or  the  public  electricity  grid.  Such  projects  generate  emissions 
reduction by replacing other sources of energy production, typically from fossil fuels. 

The Commission will: 

In the short term,  

To create a regulatory environment conducive to sustainable growth: 

– 

– 

– 

– 

– 

issue  guidance  in  2013  on  renewable  energy  support  schemes  used  by 
Member States to meet their 2020 targets for renewables,  

consider,  upon  request,  issuing  a  Guidance  letter  on  the  competition 
assessment of long-term electricity contracts in case of novel or unresolved 
questions, 

conduct  an  analysis  of  the  composition  and  drivers  of  energy  prices  and 
costs in Member States  with a particular focus on the impact on households; 
SMEs  and  energy  intensive  industries,  and  looking  more  widely  at  the  EU’s 
competitiveness  vis-à-vis  its  global  economic  counterparts  ahead  of  the 
discussion  at  the  February  2014  European  Council.  Report  on  end-user 
electricity  prices  for 
its  components  (e.g.  energy 
including 
component, levies and tariffs, taxes) in the EU Member States and other major 
economies, 

industry, 

analyse  the  impact  of  the  ETS  on  electricity  prices  in  the  EU  and,  in  the 
context of the 2030 climate policy discussions, examine the need for measures 
to address the risk of carbon leakage for specific sectors, 

develop proposals for the EU's 2030 climate policy framework in a way that 
fully considers cost-efficiency and potential impacts on the costs for industry. 
The  development  of  the  2030  climate  policy  will,  without  prejudice  to  the 
outcome  of  the  public  consultation  launched  by  the  Green  Paper  “A  2030 
framework  for  climate  and  energy  policies”  endeavour  to  take  into  account, 
inter alia, the international competitiveness of the European industry as well as 
the  specific  features  of  certain  industries  and  progress  in  the  global  climate 
change negotiations as well as an assessment of all relevant CO2 emissions in 
the EU, 

– 

ensure  that  the  assessment  of  the  risk  of  carbon  leakage  to  be  done  in  the 
context of the new carbon leakage list is performed in an open and transparent 
manner in accordance with the requirements of the ETS Directive taking into 

55  

COM(2011) 21 

16 

 
 
                                                 
account the specific features of certain industries and the impacts of electricity 
costs on their competitiveness, 

shortly propose to add the manufacturing of certain forged ferrous products to 
the list of sectors deemed exposed to carbon leakage for direct costs. 

promote  best  practice  in  energy  efficiency,  based  on  the  results  of  energy 
audits to be carried out by companies in compliance with the Energy Efficiency 
Directive56, as well as on European and international studies, 

promote energy efficiency investments (new boilers for power generation, gas 
recovery  in  steelmaking,  Top-Pressure  Recovery  Turbine  Plant  (TRT),  waste 
heat recovery),  

consider eco-design requirements for recyclability and dismantling in order to 
ensure easier separation of steel suitable for recycling from relevant products. 

– 

– 

– 

– 

To enhance innovation: 

– 

– 

integrate the steel industry in RDI, demonstration, deployment and market 
uptake  measures for energy efficient products, technologies and  solutions in 
order to implement the Energy Efficiency Directive and other energy efficiency 
legislations and policies, 

assess how the revenues related to the ETS can be earmarked and used to 
finance  climate-related  objectives,  including  the  deployment  of  new  and 
innovative technologies in the EII. 

In the medium to long term 

To create a regulatory environment conducive to sustainable growth: 

– 

– 

– 

– 

pursue  negotiations  towards  concluding  a  binding  international  agreement 
on  climate  change  by  2015  to  ensure  adequate  commitments  by  all,  and 
their  respective 
notably  from  major  economies, 
responsibilities and capabilities while ensuring transparency and accountability 
as well as incorporating a robust system of compliance and enforcement, 

into  account 

taking 

call on the European Committee for Standardisation to finalise as speedily as 
possible  standards  for  assessing  the  GHG  emissions  in  energy-intensive 
sectors, 

continue its efforts to develop the Life Cycle Approach (LCA) methodology 
to allow better consideration of recyclability of materials,  

assess the LCA evaluation along value chains and the recyclability of materials 
and integrate the recyclability of materials into relevant policy proposals and 
strategies.  

To diversify supply: 

– 

set the conditions to enable the future exploitation of indigenous gas fossil fuel 

56 

Directive 2012/27/EU 

17 

 
 
 
                                                                                                                                                         
resources,  both  conventional  and  unconventional  in  an  environmentally  safe 
manner,  as  they  could  contribute  to  reducing  EU's  energy  import  dependence 
and prices. 

The Commission invites Member States to: 

– 

– 

– 

– 

– 

– 

in  preparation  for  the  discussions  at  the  February  2014  European  Council, 
based on the Commission's report, assess the impact of all national measures 
on  the  price  of  energy  for  EII  such  as  taxation,  capacity  and  network 
levies, tariffs and support mechanisms for renewables or other energy forms, 

on this basis, consider appropriate measures to reduce the price of energy 
for  EII  in  the  respect  of  fiscal  consolidation,  competition  rules  and  the 
integrity of the internal market, 

consider establishing earmarking ETS revenues for RDI projects for EII,  

step  up  efforts  to  decrease  the  gap  of  average  energy  prices  and  costs 
between  the  EU  industry  and  its  main  competitors  by  strengthening  market 
functioning and security of supply in the energy sector, 

assess initiatives related to pooled electricity generation, long term contracts 
and partnerships, 

exchange best practice and share information. 

The  Commission  will  assess  the  impact  of  the  measures  taken  and  if  necessary  give 
additional recommendations to minimize energy costs for EII.  

3.5   Innovation 

The  most  modern  installations  in  the  EU  steel  industry  are  close  to  the  limits  of  what 
current  technologies  can  do,  and  the  steel  industry  will  struggle  to  achieve  further 
significant  CO2  emission 
introduction  of  breakthrough 
technologies57. New technological innovations are several years away. Potential breakthrough 
technologies were investigated in the past as part of an "umbrella" of projects, under the name 
"ULCOS"58. The Commission supported ULCOS: funding 40 Million € in total from the 6 th 
Framework Programme for R&D as well as from the Research Fund for Coal and Steel.  

reduction  without 

the 

Under  Horizon  2020,  specific  support  for  the  process  industry  may  be  given  to  a  proposed 
public private partnership (PPP), called SPIRE59. In addition, Carbon Capture and Storage 
(CCS) has been identified as a key technology for decarbonisation of the industrial sector in 
the  2050  Low  Carbon  Economy  Roadmap60  as  well  as  in  the  2050  Energy  Roadmap61, 
including  CCS  applications  in  industrial  processes  as  well  as  in  energy  production 
applications. It is one of the priorities of the Strategic Energy Technology (SET) Plan with a 
dedicated  European  Industrial  Initiative  and  Joint  Research  Programme  of  the  European 
Energy  Research  Alliance  (EERA).  The  importance of  steel  for  energy  applications  and  the 
needs for research and innovation has been defined in the Materials Roadmap Enabling Low 

57  
58  
59  
60  
61  

Prospective scenarios on energy efficiency and CO2 emissions in the Iron & Steel industry (2012), JRC 
ULCOS stands for Ultra–Low Carbon dioxide (CO2) Steelmaking 
Sustainable Process Industry through Resource and Energy Efficiency 
COM (2011) 112 final 
COM (2011) 885 final 

18 

 
 
 
                                                 
Carbon Energy Technologies62. Further proposals for R&D&I activity of the kind investigated 
under  the  previous  R&D  phase  of  ULCOS  are  therefore  possible.  For  2014-2020,  research 
projects will also be funded for roughly 280 million by the Research Fund for Coal and Steel. 

Looking  at  the  future,  it  is  clear  however,  that  an  industrial  scale  demonstration  project  of 
producing steel with CCS will be required, and the likely financial envelope will fall beyond 
the  typical  size  of  a  R&D&I  project.  Indeed,  it  is  estimated  that  the  full  ULCOS-related 
spectrum of demonstration experiments would cost in excess of 500 Million €. The 
leverage 
of  other  instruments  is  therefore  clearly  needed  for  the  next  phase  of  commercial 
demonstration of CCS technologies for steel production, for instance a new NER 300 call, a 
further European Energy programme for Recovery, or the use of structural funds. 

Moreover,  even  if  such  technologies  are  available,  their  broad-scale  deployment  will 
depend on whether their application in the EU is possible at competitive production costs, as 
well  as  on  public  acceptance.  In  particular,  CCS  will  need  the  setting  up  of  appropriate 
mechanisms  to  engage  local  communities  as  partners  in  such  endeavours  and  ensure  an 
adequate carbon price. 

The European steel industry is constantly developing new types of steel to address the needs 
of  specific  applications.  However,  there  is  today  a  need  to  stimulate  R&D&I  in 
environmentally friendly process technologies to a much greater extent than has been the case 
in  the  past.  The  potential  of  new  sorting  technologies  and  innovative  systems,  markets  and 
business  models  in  further  developing  scrap  recycling  is  particularly  promising  in  terms  of 
improving competitiveness and reducing environmental impact and emissions. 
The  European  Innovation  Partnership  on  Raw  Materials  (EIP)63  fosters  innovation 
through  the  value  chain  of  steel,  from  exploration  and  extraction,  to  efficient  processing, 
recycling and substitution. 

Industrial  deployment  of  emerging  steel  technologies  can  be  increased  using  the  European 
Investment  Bank’s  (EIB)  financial  mechanisms64.  Steel  sector  projects  with  a  lower  risk 
profile  are  often  eligible  for  EIB  long-term  financing.  In  addition  highly  innovative  steel 
products  may  be  financed  under  the  Risk  Sharing  Finance  Facility  (RSFF),  which  is  an 
innovative credit risk sharing scheme jointly set up by the European Commission and the EIB 
to improve access to debt financing promoting activities with a higher financial risk profile in 
the fields of research, technological development, demonstration and innovation investments. 

The Commission will: 

– 

62  
63  
64 

consider  to  support,  in  the  framework  of  Horizon  2020,  in  accordance  with 
applicable  state  aid  rules,  R&D,  demonstration  and  pilot  projects  for  new 
technologies for cleaner, more resource and energy-efficient technologies, including 
PPPs  fulfilling  the  relevant  requirements.  One  potential  PPP  -  SPIRE  (Sustainable 
Process Industry through Resource and Energy Efficiency) and the Strategic Energy 

SEC(2011) 1609 
COM(2012) 82 final 
The not-for-profit EIB still has a “triple-A” rating with all three credit ratings agencies and is therefore 
able  to  borrow  money  on  the  global  financial  markets  at  extremely  favourable  interest  rates  and pass 
them on to selected projects 

19 

 
 
 
                                                 
Technology Plan (SET Plan) are under preparation, 

– 

– 

– 

cooperate  internationally  in  upstream  research  projects,  where  appropriate  and 
useful in increasing European competitiveness and market access, 

focus financial support more on the up-scaling and piloting phase instead of only 
focusing on the research phase, 

explore,  in  the  context  of  the  EIP  on  Raw  Materials,  and  in  particular  its 
forthcoming  strategic  implementation  plan,  all  the  options  to  foster  innovation  in 
the steel industry along the raw materials value chain, including recycling. 

The Commission invites Member States to: 

– 

explore  the  necessity  and  viability  of  earmarking  funding  sources  to  establish 
specific  programmes  to  fund  R&D&I  projects  in  the  steel  sector  and  favour  the 
creation of clusters. 

The Commission invites the European Investment Bank to: 

– 

consider  long-term  financing  applications  for  steel  projects  that  have  the 
objective of ensuring compliance with permitting requirements under the Industrial 
Emissions Directive based on BATs. 

3.6   The social dimension: restructuring and skill needs  

The  outlook  for  employment  in  the  steel  sector  is  of  serious  concern  and  merits  full 
political  attention,  not  least  because  40  000  jobs  have  been  lost  in  recent  years,  due  to 
restructuring.  

This  means  that,  Member  States  are  continuing  to  face  substantial  social  challenges  with 
regards to past and future capacity closures which have already been announced, with several 
regions  being  affected.  Furthermore,  if  it  becomes  increasingly  difficult  to  produce  steel  in 
Europe, industries depending on the same value chain will also close or invest elsewhere. 

For  the  sector  to  remain  strategic  for  the  European  manufacturing  industry  and  for 
employment, urgent (temporary) measures – in addition to long term measures – need to be 
taken. It will also require the development of temporary working arrangements with public 
support to workers in order to retain labour capacity and retrain workers during periods of 
low economic conjuncture in line, where appropriate, with applicable State aid rules. 

Various EU  funds and policy  instruments  can be mobilised  to  alleviate the  social cost of 
adjustment  and  to  ensure  that  the  necessary  skills  required  are  retained  and  developed  for 
the future competitiveness of the industry. This should be done in ways which support moves 
over  time  to  new  advanced  production  techniques  and  innovative  products  and  should  not 
preclude  any  necessary  restructuring.  Such  measures  are  particularly  relevant  for  the  steel 
sector as it will have to tackle overcapacities. 

The anticipation of restructuring needs of the EU steel industry is key in mitigating adverse 
social effects. In order to minimise its social impact, good practice in the field of training and 
requalification at company level should be disseminated and promoted.  

This makes it even more important for all stakeholders to address cyclical constraints with 
temporary measures aimed at preserving production and employment in the long term and to 
limit  capacity  reduction  to  recognised  structural  overcapacity.  The  sector  has  already  taken 
adjustment  measures  by  closing  more  than  30  mt  in  production  capacities  in  the  European 
steel industry, 20 mt of which may be considered permanent adjustment.  

20 

 
 
 
At the same time, the steel industry workforce is undergoing an unprecedented change. 
The age structure in most European steel-producing companies is such that more than 20 % of 
the actual workforce will have left the industry in the period 2005-2015, and close to 30 % 
will leave up to 2025. The industry thus needs to be able to attract young and creative talent. 

Special activities are needed to ensure that highly-skilled scientists and managers will take 
the European steel industry forward and provide new sources of competitive advantage. 

Structural funds can help to accompany restructuring in the sector and foster innovation and 
smart growth specialization. In this context of deep change and restructuring, the European 
Social  Fund  (ESF)  and  the  European  Globalisation  Adjustment  Fund  (EGF)  should  be 
fully used to support the skills upgrading and updating of workers of the sector and to help 
positive  and  quick  professional  transitions  for  those  who  risk  being  made  redundant.  With 
adequate national and/or regional programming, the ESF can play this role in an anticipative 
way,  on  a  permanent  basis  and  well  in  advance  of  specific  restructuring  operations  –  thus 
mitigating  in  advance  their  future  impact.  The  EGF  may  complete  this  by  supporting  with 
active labour market measures workers being made redundant.  

Under EU State aid rules, the steel sector can benefit from several categories of State support 
measures  that  contribute  to  the  EU  2020  objectives:  R&D  and  innovation,  training  and 
employment  aid  and  aid  to  increase  environmental  protection.  For  example,  the  steel  sector 
has  already  benefited  from  exemptions  from  national  environmental  and  energy  taxes,  from 
State aid for energy efficiency measures and from aid to investments going beyond mandatory 
EU standards. In addition, steel is recognised as one of the sectors at risk of carbon leakage 
and Member States can mitigate the effect of higher electricity prices induced by the ETS on 
the competitiveness of the sector from 2013 until 2020 as explained above.  

The Commission will: 

In the short term 

– 

– 

– 

– 

65  

promote the employment of young people in the sector through the reinforcement of 
apprenticeship schemes and youth-oriented recruitment processes, 

encourage the creation of a European Skills Council for the steel industry, to bring 
together  existing  national  organizations  working  on  skills  development  and 
employment  in  the  steel  sector.  The  Skills  Council  can  include,  depending  on  the 
willingness  and  capacity  of  organisations  in  the  sector,  employers’  and  workers’ 
representatives at European and national levels and education and training providers' 
organisations, 
support Sector Skills Alliances, through the Erasmus for All programme65, drawing 
on evidence of skills needs and trends, Sector Skills Alliances will work to design 
and deliver joint curricula and methods, in particular work-based learning, which 
provide  learners  with  the  skills  required  by  the  labour  market  in  a  specific  sector, 
such as the steel industry, 

support  active  training  and  life-long-learning  policies  including  in  relation  to 

COM(2011) 787 final 

21 

 
 
  
                                                 
– 

– 

– 

– 

energy saving skills through the training of energy auditors and energy managers, 

launch  (on  a  clear  request  from  trade  unions  and/or  national  authorities)  an  inter-
service task force66 to study and follow up the main cases of steel plant closures or 
significant  downsizing,  so  as  to  streamline  the  use  of  the  relevant  EU  Funds  in 
case of significant downsizing or closures, 

present  a  Quality  Framework  for  anticipation  of  change  and  restructuring, 
setting out the best practices in this field to be implemented by all stakeholders, 

ensure  that  the  granting  of  EU  funds,  in  the  context  of  Horizon  2020  and  of  the 
structural funds, follows the principle of regional smart specialisation and takes into 
account the durability of the investment in creating and maintaining jobs in the 
particular region, 

continue  applying  co-financing  rules  and  decreased  own  contribution 
structural funds for programme countries. 

in 

The Commission invites Member States to: 

– 

– 

– 

– 

explore  the  possibility  of  using  together  with  regional  authorities,  the  European 
Social Fund (ESF) for workers' retraining and re-skilling, including by setting up a 
specific funding measure related to the steel sector, 

explore the possibility of using structural funds, together with regional authorities, 
in  the  next  programming  period,  with  a  view  to  alleviate  the  social  impacts  of 
restructuring in the steel sector, 

conclude the on-going negotiations on the proposal for a Regulation on the European 
Globalisation  Adjustment  Fund  (EGF)  for  the  programming  period  2014-202067 
and requesting its use, 

facilitate  dialogue  between  social  partners  in  view  of  reaching  an  agreement  on 
temporary initiatives to maintain jobs, such as the possibility of introducing labour 
flexibility schemes, with regard notably to cyclical adjustment. 

The Commission invites industry to: 

– 

– 

– 

– 

play an active role to remedy the skills gaps and shortages, 

continue the necessary adaptation of the industry in accordance with best practices 
on  anticipation  of  change  and  restructuring,  including  through  social  dialogue  and 
proper involvement of regional stakeholders, 

examine  restructuring  needs  and  possible  capacity  adjustments  in  view  of  the 
future demand of key sectors, taking into account the need to deal differently with 
structural and cyclical trends, 

co-operate with other stakeholders, especially national and regional authorities in 
ensuring  that  cyclical  overcapacity  is  dealt  with  through  publicly  supported 
temporary measures preserving employment in the long run. 

66  
67  

COM(2005) 120 final 
COM(2011) 608 

22 

 
 
                                                                                                                                                         
4. 

CONCLUSIONS 

As  outlined  above,  the  EU  vision  for  2030/2050  sets  strategies  and  pathways  to  shift  the 
European economy towards a sustainable and efficient global energy system, the renewal of 
transport means coupled with the establishment of a smart transport management system, as 
well as the refurbishment of all buildings and their integration in smart supply grids.  

This  vision  is  intensive  in  advanced  materials  such  as  steel,  the  availability  of  which  at  the 
proper  quality,  volume  and  price  is  a  prerequisite  to  the  successful  implementation  of  that 
vision. Only the right policy and regulatory framework combined with targeted action by the 
Commission, Member States and industry will help the steel sector overcome its difficulties, 
increase its competitiveness and produce the innovative steel products necessary to maintain 
and gain market share. 

The constructive discussions on steel have highlighted the usefulness and the need to continue 
the  dialogue  among  major  stakeholders  in  this  strategic  industrial  sector.  Therefore  the 
Commission proposes  to formally create a High-Level Group on steel. This process would 
entail an annual high-level meeting. Its main aim will be to provide a European platform of 
mutual information, dialogue and exchange of best practice. Overall, it should facilitate and 
support  the  efforts  of  the  European  steel  sector  to  maintain  and  improve  its  capacity  to 
compete in the global market. 

Within  twelve  months  of  the  adoption  of  the  Action,  the  Commission  will  assess  how  the 
implementation  of  this  Action  Plan  has  had  an  impact  on  the  competitiveness  of  the  steel 
industry and, if necessary, give additional recommendations and guidance. 

23