COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF THE REGIONS AND THE EUROPEAN INVESTMENT BANK Steel: Preserving sustainable jobs and growth in Europe
Date: 2016-03-16
Institutions: European Commission, Secretariat-General
Subjects: climate change, climate change policy, competitiveness, energy efficiency, innovation, international market, iron and steel industry, job preservation, restriction on competition

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 16.3.2016  COM(2016) 155 final   COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF THE REGIONS AND THE EUROPEAN INVESTMENT BANK Steel: Preserving sustainable jobs and growth in Europe  
 
 
1.  EUROPE'S STEEL INDUSTRY AND ITS MAIN CHALLENGES 

A  robust  industrial  base  is  essential  for  Europe's  economic  growth,  preservation  of 
sustainable jobs and our competitiveness on global markets.  

A  strong  steel  sector  forms  the  basis  of  many  industrial  value  chains.  The  steel  sector  in 
Europe has an annual turnover1 of EUR 166 billion and is responsible for 1.3% of EU GDP. 
In 2015 it provided 328 000 direct jobs with an even greater number of dependent jobs. The 
European steel sector is characterised by modern, energy- and CO2 efficient plants producing 
high  value  added  or  niche  products  for  the  world  market,  based  on  an  outstanding  R&D 
network. The European Union is the second steel producer after China, producing on average 
170 million tonnes of crude steel per year. European steel industry remains a world leader in 
the highly technologically specialised product segment. 

Crude steel production per selected EU countries in 2015 
(Jan-Nov) 

39,7 

S
N
O
T
N
O
I
L
L
I

M

40

30

20

10

0

20,5 

14,0 

13,9 

10,2 

8,6 

8,5 

DE

IT

FR

ES

UK

BE/LUX

PL

Despite  its  strong  potential,  Europe's  competitive  position  on  the  global  steel  market  has 
deteriorated in the last few years. While global demand remained buoyant in the wake of the 
economic  and  financial  crisis,  the  economic  slowdown  in  China  and  other  emerging 
economies  had  a  negative  impact  on  global  steel  demand  since  2014.  In  addition,  the  spare 
production  capacity  in  certain  third  countries,  notably  in  China,  has  increased  dramatically. 
The overcapacity in China alone has been estimated at around 350 million tonnes2, almost the 
double of the Union's annual production.  

1   2014. 

2   Difference  between  OECD  (2015)  capacity  figures  and  actual  steel  production  (World  Steel  Association 

2015). 

2 

 
 
 
 
                                                            
 
 
World crude steel production in 2015 

Russia 
4,4% 

S. Korea 
4,4% 

Brazil 
2,1%  Turkey 
2,0% 

United 
States 
4,9% 

India 
5,6% 

Japan 
6,6% 

Others 
9,4% 

EU 28 
10,4% 

China 
50,3% 

The excess production of steel has recently led to a dramatic increase of exports, destabilising 
global steel markets and depressing steel prices world-wide. Steel imports from China to the 
EU have surged in the last three years. Market prices for some steel products collapsed by up 
to  40%  due  to  the  surge  of  volumes.  Some  third  countries  have  reacted  by  imposing  trade 
restrictions  and  other  forms  of  trade  barriers.  In  addition,  the  overcapacity  gave  rise  to  an 
unprecedented wave of unfair trading practices distorting the global level playing field. These 
trading  practices  would  shift  the  burden  of  global  overcapacity  disproportionately  towards 
European producers and their employees. In 2015 and early 2016 alone, the Commission had 
to launch ten new investigations against unfair trading practices relating to steel.  

These  circumstances  compound  a  number  of  additional  long-term  challenges  requiring  a 
forceful response at the European level, helping the steel sector to adapt, innovate and use its 
potential  in  terms  of  quality,  cutting-edge  technology  and  a  highly  skilled  workforce.  A 
comprehensive response is needed by industry, Member States and the EU institutions.  

2.  FACING THE CHALLENGES 

Short-term  and  long-term  measures  are  needed  in  response  to  these  developments. 
Action has been taken already, but continued and enhanced joint efforts are needed to 
provide, with a greater sense of urgency, adequate responses to the various challenges. 
Best use needs to be made of all available instruments at European and national level to 
bring relief to the sector and accompany its modernisation.  

The situation of the steel industry in Europe is high on the Commission's agenda. In February 
2016, the Commission therefore hosted a high level conference on energy intensive industries 
to  take  stock  of  measures  taken  in  the  current  context,  including  the  implementation  of  the 

3 

 
 
 
2013 Steel Action Plan3. The issue has been discussed with the Competitiveness Council in 
November 2015 and in February 2016, as well as with the European Parliament in the context 
of  its  Resolution  on  'Developing  a  sustainable  European  industry  of  base  metals'4  in 
December  2015.  The  High-level  Group  on  energy-intensive  industries  provides  a  forum  for 
discussion between all relevant stakeholders. 

The  Commission  is  implementing  and  strengthening  actions  which  are  instrumental  for 
bringing immediate relief to the industry and restoring a level playing field. But a joint effort 
is needed to go further. Short-term measures alone will not suffice to guarantee the long-term 
competitiveness  and  sustainability  of  energy  intensive  industries  like  steel.  Their  future 
depends  on  their  ability  to  embrace  modernisation  and  implement  innovations.  Past  efforts 
have  been  rewarded  by  making  the  EU  steel  industry  more  dynamic,  innovative  and 
customer-oriented.  These  efforts  need  to  be  supported  and  stepped  up  if  we  are  to  tackle 
today's challenges.  

The  European  Union  and  its  Member  States  can  help  the  steel  industry  and  other  energy-
intensive industries by promoting investment and creating a favourable business environment. 
The Commission's strong focus on jobs and growth, as well as strategic initiatives such as the 
Investment  Plan  and  the  Capital  Markets  Union,  the  Single  Market  Strategy,  the  Digital 
Single  Market  Strategy,  the  Energy  Union  or  the  Circular  Economy  contribute  to  that 
objective. In addition, a number of European funding instruments can assist in implementing 
the necessary reforms and attenuating problems arising during the inevitable transformation of 
the  industry  of  base  metals.  They  should  be  used  to  the  fullest  extent  and  in  an  accelerated 
manner.  

A.  AN EFFECTIVE AND RESPONSIBLE TRADE POLICY 

Acting together to strengthen our defences against unfair trade practices 

The  Commission  is  imposing  a  record  number  of  trade  defence  measures  to  offset  the 
detrimental  effect  of  dumping  on  Europe's  steel  industry.  The  efficiency  and 
effectiveness  of  our  action  can  however  be  significantly  enhanced,  accelerated  and 
further improved if Member States support the Commission’s efforts.  

Current efforts to strengthen trade defence 

The  number  of  trade  defence  measures  on  steel  products  has  reached  37  in  total  with  16 
measures  concerning  imports  from  China.  The  pace  of  adopting  measures  has  accelerated 
with  five  measures  imposed  in  2014  and  seven  in  2015.  The  Commission  is  mobilising 
additional  tools,  for  example  it  is  now  opening  investigations  based  on  a  threat  of  injury. 
Moreover,  the  Commission  ensures  that  the  industry  gets  actual  relief  significantly  before 
provisional  measures  are  imposed.  This  is  achieved  by  registering  imports  prior  to  the 
adoption  of  provisional  measures.  This  allows  the  Commission  to  retroactively  apply 

3   COM/2013/0407. 

4   P8_TA(2015)0460/ A8-0309/2015. 

4 

 
 
                                                            
definitive  antidumping  duties  three  months  before  the  adoption  of  provisional  measures, 
where the relevant legal conditions are met.  

Additional efforts to accelerate the process 

The Commission will immediately use the available margins to further accelerate the adoption 
of provisional measures. For instance, while the current practice is to consult Member States 
in  the  Committee  before  adopting  provisional  measures,  there  is  scope  for  increased  use  of 
written consultations. In case of extreme urgency, provisional measures can also be imposed 
after  informing  the  Member  States.  The  Commission  will  further  optimise  its  internal 
procedures, follow a stricter approach when dealing with requests for deadline extensions of 
questionnaire  responses  and  where  feasible  streamline  hearings  by  grouping  them  together. 
This would allow speeding up the overall procedure by at least one month. 

Modernisation of Trade Defence Instruments 

  To  further  improve  the  efficiency  and  effectiveness  of  EU  action,  our  trade  defence 
instruments  need  to  be  modernised.  Three  years  ago,  the  Commission  already  put 
forward a comprehensive package to that effect5. The European Parliament adopted its 
report in  first reading. However, Member States  have so far prevented this file  from 
moving forward in the Council. It is now high time to back-up rhetoric with action and 
adopt swiftly the modernisation package.  

  The  recent  experience  furthermore  shows  that  additional  reforms  need  to  be 
considered,  taking  into  account  the  inter-institutional  debate  and  most  recent 
developments: for example, the rationale for the removal of the lesser-duty rule should 
apply also to the steel sector and more generally to situations where the market of the 
exporting  country  is  subject  to  significant  distortions.  In  addition,  it  may  be 
appropriate  with  regard  to  the  calculation  of  the  injury  margin  to  better  define  the 
target profit to ensure that injury is adequately removed.  

  Additional steps, which require a change in the Basic Regulations, can and should be 
taken6.  For  instance,  intermediary  deadlines  such  as  those  for  sampling  of  interested 
parties  or  parties’  reaction  to  the  disclosure  of  the  essential  facts  and  considerations 
should  be  adjusted.  Moreover,  the  consultation  process  of  Member  States  should  be 

5   Compared to other jurisdictions, the EU trade defence instruments are based on the involvement of Member 
States at key stages of the investigation. The Commission is required, among others, to conduct a full-fledged 
Union  interest  test  analysis  and  detailed  injury  calculations  to  apply  the  lesser-duty  rule.  Under  the  lesser 
duty  rule  the  level  of  the  anti-dumping  duty  is  equal  to  the  lesser  of  the  dumping  and  the  injury  margin, 
resulting  in  lower  duties.  This  rule  is  mandatory  under  EU  anti-dumping  legislation,  whereas  it  is  simply 
recommended  under  WTO  rules.  The  lesser  duty  rule  is  not  applied  by  trade  partners  in  a  comparable 
situation as the EU. 

6   In line with Commission’s Better Regulation Guidelines, SWD(2015) 111 

5 

 
 
                                                            
significantly streamlined. This would allow speeding up the overall procedure by up to 
two months7. 

  The Commission calls on the co-legislators to work with it as a matter of urgency and 
it stands ready to propose swiftly the additional reform proposals mentioned above.  

In  addition,  given  the  current  context  and  the  importance  of  the  issue  at  stake,  the 
Commission  will  propose  a  prior  surveillance  system  on  steel  products.  Prior  surveillance 
measures are foreseen in the EU's safeguard instrument and are based on an automatic import 
licensing  system.  They  can  be  introduced  when  import  trends  threaten  to  cause  injury  to 
Union producers. 

Finally,  stakeholders  can  provide  their  input  on  some  of  the  elements  of  the  EU's  trade 
defence system as part of an ongoing public consultation: in the light of the upcoming expiry 
of  certain  provisions  in  China's  Protocol  of  Accession  to  the  WTO,  the  Commission  is 
analysing  whether,  and  if  so  how,  the  EU  should  change  the  treatment  of  China  in  anti-
dumping  investigations  after  December  2016.  Before  taking  a  view  on  this  matter,  the 
Commission is conducting an in-depth impact assessment and is consulting stakeholders. The 
impact  assessment  will  carefully  analyse  the  potential  economic  and  social  effects  of  any 
change  in  the  treatment  of  China,  with  a  particular  focus  on  jobs  and  taking  into  account 
differences across Member States. The public consultation launched in February 2016 aims at 
collecting  stakeholders'  input  regarding  the  options  identified  by  the  Commission.  For  the 
Commission,  it  is  clear  that  no  decision  can  be  taken  in  this  context  without  significant 
transitional periods and substantial attenuating measures. 

Tackling the causes of global overcapacity 

In  addition  to  measures  aiming  to  mitigate  the  effects  of  global  overcapacities,  the 
Commission is tackling the underlying causes of the problem with our main partners. A 
global problem requires a global solution.  

In  order  to  restore  the global  level  playing  field,  the  Commission  is  working  with  the  main 
partners across the various fora: 

  At  bilateral  level,  the  Commission  has  set  up  Steel  Contact  Group  meetings  with 
China,  Japan,  India,  Russia,  Turkey  and  the  United  States.  Steel  Contact  Group 
meetings  with  Japan  and  China  took  place  on  8  and  10  March  2016.  On  those 
the  matters  concerning 
occasions, 
overcapacity. The Commission will intensify and multiply its meetings with some of 
our main steel trade partners, notably China.  

specifically  addressed 

the  Commission 

  At  multilateral  level,  the  Commission  plays  an  active  role  in  the  OECD  Steel 
Committee. Following concerns expressed by the EU and like-minded countries at the 

7   Achieving this objective would bring the Union significantly closer to the speed of imposing trade defence 
measures  in  other  jurisdictions,  despite  a  more  demanding  and  complex  legal  framework.  It  can  however 
only be achieved with the active support of the Member States and the industry. 

6 

 
 
                                                            
last meeting regarding excess capacity, notably in China, the Committee will organise 
a  high-level  symposium  addressing  the  challenge  of  reducing  overcapacity  through 
structural adjustment.  

 

In the WTO, the EU will remind China of the need to enforce its WTO obligations on 
transparency  and  the  notification  of  subsidies.  It  will  actively  raise  this  issue  at  the 
WTO peer-Trade Policy Review of China in June 2016. The Commission is studying 
subsidy schemes in China, including for the steel sector. It will use any relevant means 
available and raise the issue within the G20 with the aim of addressing overcapacity.  

  The Commission encourages third countries to apply the appropriate policy measures 
which respect the current needs of the market. The Commission is negotiating rules on 
the behaviour of state-owned enterprises and subsidies under Free Trade Agreements, 
following  closely  the  subsidy  notifications  in  the  WTO.  In  this  context,  the 
Commission is also pursuing discipline on subsidies and State-Owned Enterprises in 
its negotiations of the Investment Agreement with China. The intention to negotiate a 
chapter on energy and raw materials in each trade agreement is of particular interest 
for the steel and other energy-intensive industries.  

B.  INVESTING TODAY IN A MODERNISED AND SUSTAINABLE STEEL INDUSTRY 

Investments in future solutions and technologies for a more competitive industry 

The  steel  sector  faces  longer-term  challenges  which  require  continued  investment  in 
breakthrough  technologies.  Several  EU  funds  actively  support  the  steel  industry  on  its 
modernisation  path  by  facilitating  investment  and  helping  the  development  and 
deployment of innovation. These possibilities should be used to the fullest extent.  

The  Commission  is  working  to  ensure  that  existing  funding  possibilities  effectively  support 
the industry in its modernisation efforts: 

  The European Fund for Strategic Investments (EFSI)8 helps bringing innovation also 
to  the  steel  sector,  by  covering  higher  financing  risks  of  innovative  projects.  EFSI 
provides  flexible  support  to  concrete  projects  by  addressing  market  failures  or  sub-
optimal  investment  situations.  Project  promoters  also  obtain  assistance  in  the 
investment process by the European Investment Advisory Hub, so that the quality of 
projects can be enhanced and attract financing. In addition, business projects can boost 
their visibility for investors on a European Investment Project Portal. A first EIB loan 
under EFSI of EUR 100 million is already helping a mid-sized Italian steel producer 
attract other investors. The total investment expected to be mobilised amounts to EUR 
227 million, enabling the company to modernise and optimise its products, processes 

8   Regulation (EU) 2015/1017 of the European Parliament and of the Council of 25 June 2015 on the European 
Fund for Strategic Investments, the European Investment Advisory Hub and the European Investment Project 
Portal  and  amending  Regulations  (EU)  No  1291/2013  and  (EU)  No  1316/2013  —  the  European  Fund  for 
Strategic Investments, OJ L 169, 1.7.2015, p. 1.  

7 

 
 
                                                            
and  environmental  performance,  and  to  remain  a  leader  in  its  field.  Other  industrial 
players  have  already  initiated  contacts  with  the  Advisory  Hub.  Others  can  benefit 
today of the opportunities provided by these new instruments.  

  EFSI  opportunities  are  complementary  to  other  EU  funds  like  Horizon  2020  and 
Structural  Funds  and  can  and  should  be  optimally  combined.  From  the  European 
Structural and Investment Funds (ESIF) EUR 44 billion will be allocated to priorities 
set in the research and innovation strategies for smart specialisation. Regions in Czech 
Republic, Slovakia, Spain, Finland and Sweden included support to modernising their 
steel  industry  in  their  priorities.  The  cooperation  between  regions  with  steel-related 
priorities  offers  an  opportunity  for  exchange  of  experiences  with  policies  and  new 
technologies.  The  Integrated  Strategic  Energy  Technology  Plan,  launched  by  the 
Commission in October 2015, is helping focussing existing Research and Innovation 
support  as  well  as  policy  action  in  the  area  of  energy  efficiency,  e.g.  by  a  more 
sophisticated use of financial support and regulatory measures.  

  Horizon  2020  and  the  ESIF  are  helping  the  steel  industry,  together  with  research 
institutes  and  other  stakeholders,  to  develop  enabling  technologies  in  resource  and 
energy  efficiency  along  the  value  chain.  Modernisation  in  the  steel  sector  is  also 
supported by the Research Fund for Coal and Steel with over EUR 50 million every 
year.  The  ultra-low  carbon  dioxide  steelmaking  project  (ULCOS)  and  its  follow  up 
projects, as well as projects funded within the SPIRE9 Public-Private Partnership are 
good examples in this respect.  

  Through  the  European  Innovation  Partnership  on  Raw  Materials,  the  industry 
cooperates  with  relevant  actors  at  EU,  national  and  regional  levels  to  accelerate 
innovations  that  ensure  secure,  sustainable  supplies  of  both  primary  and  secondary 
raw materials.  

Investing in people  

Modernising  Europe's  steel  industry  is  about  investing  in  people  and  increasing 
employment opportunities.  

As a social market economy, Europe cannot – and does not want to – compete on the basis of 
low wages or deteriorating working conditions and social standards. Europe needs to compete 
on the basis of innovation, cutting-edge technology, premium quality and efficient production. 
All this requires people with excellent skills. Building, running and maintaining a modern and 
competitive  steel  industry  is  only  possible  with  a  trained  workforce.  Preserving  industrial 
know-how and a skilled workforce, in particular as regards young employees, is an important 
asset of EU’s base metal industry. The need to invest in human resources will therefore be at 
the  heart  of  the  forthcoming  New  Skills  Agenda,  which  will  benefit  a  broad  range  of 
economic sectors, including the steel industry.   

9   Sustainable Process Industry through Resource and Energy Efficiency.  

8 

 
 
                                                            
In some cases, structural changes may lead to job losses. This has serious social consequences 
for  workers  concerned,  their  families  and  the  regions  in  which  they  live.  The  European 
Globalisation Adjustment Fund (EGF) can co-fund up to 60% of the total cost of active labour 
market measures helping workers finding new jobs where major redundancies have occurred. 
Approximately  5,000  workers  have  already  been  targeted  by  EGF  assistance  in  the  whole 
basic metals sector, and Member States have the possibility to request further assistance from 
EU in this field.  

It  is  important  to  accompany  workers  and  local  economies  affected  in  the  case  of  major 
relocations  of  activities.  To  this  end,  the  EU  has  developed  instruments  to  support  workers' 
employability and mitigate the adverse social consequences of restructuring. The EU Quality 
Framework for anticipation of Change and Restructuring10 can help bring together companies, 
workers  and  their  representatives,  social  partners  and  national  and  regional  authorities  to 
achieve  a  fair  and  socially  responsible  management  of  change  and  restructuring.  The 
Commission will involve social partners via the relevant European social dialogue committees 
in the design and implementation of the necessary measures, e.g. mapping of jobs and skills 
needs, measures promoting internal and external mobility.  

Information  and  consultation  of  workers  at  company  level  and  at  European  level  when 
transnational  issues  are  at  stake  are  also  crucial  for  solving  problems,  easing  conflicts  and 
developing  good  practices  in  anticipating  change  and  preparing  and  managing  restructuring 
properly.  That  is  why  it  is  important  for  Member  States  and  relevant  stakeholders  to  fully 
implement and use the tools provided by the EU11 to face the challenges of the steel industry. 

The EU also stands ready to support Member States' broader efforts to pursue active labour 
market policies that seek to equip the unemployed with the skills and qualifications they need 
to  return  to  the  labour  market.  In  2015,  the  Commission  tabled  a  proposal  to  improve  the 
support  given  to  long-term  unemployed  and  to  make  active  labour  market  policy  more 
effective. The European Social Fund has allocated EUR 27 billion for measures in the field of 
education, training and lifelong learning. By 2023, over 10 million unemployed participants 
are  expected  to  benefit  from  the  ESF  and  2.9  million  people  are  expected  to  gain  a 
qualification  thanks  to  an  ESF  intervention.  Workers  affected  by  restructuring  are  likely  to 
qualify for professional training, re-skilling and up-skilling under the European Social Fund, 
in the framework of regional and national operational programmes. Furthermore, investments 
in skills are eligible under the European Fund for Strategic Investments. 

A modern competition policy for a strong European steel sector 

10   COM(2013) 882. 

11   Directive 2009/38/EC on the establishment of a European Work Council of a procedure in Community-scale 
undertakings  and  Community-scale  groups  of  undertakings  for  the  purposes  of  informing  and  consulting 
employees, Directive 2002/14/EC establishing a general framework for informing and consulting employees 
in the EC, Directive 2001/23/EC relating to the safeguarding of employees' rights in the event of transfers of 
undertakings, businesses or parts of undertakings or businesses, Directive 98/59/EC of 20 July 1998 relating 
to collective redundancies.  

9 

 
 
                                                            
Competition policy is an important element to support the long term competitiveness of 
Europe’s steel producers. The Commission encourages Member States to make best use 
of the modernised EU State aid framework by adapting support to national situations, 
priorities and constraints, as it is possible under the new framework.  

To  ensure  a  level  playing  field  for  European  producers  internationally,  the  Commission  is 
acting  both  multilaterally,  in  the  OECD  and  WTO,  and  bilaterally  through  its  Free  Trade 
Agreements.  It  is  working  for  increased  transparency  for  all  subsidies,  a  consultation 
mechanism and disciplines regarding the prohibition of unlimited guarantees and restructuring 
aid to non-viable companies, the most distortive kinds of subsidies. Support for this approach 
from the European Parliament and the Council is of crucial importance.  

EU  State  aid  rules  avoid  subsidy  races  in  the  internal  market  and  promote  fairness  towards 
efficient  manufacturers  who  restructure  with  their  own  resources.  State  aid  rules  have  been 
thoroughly  modernised.  They  allow  support  to  the  global  competitiveness  of  efficient  and 
productive  steel  producers.  Member  States  should  make  best  use  of  this  new  framework  to 
support the steel industry. In particular:  

  More support could be given to cross-border industry research or technology projects 

of common European interest (IPCEI);  

  State  aid  rules  for  R&D&I  allow  public  support  to  incentivise  the  energy  intensive 
users  to  develop  innovative  solutions,  such  as  carbon  capture  and  use  (CCU) 
technologies,  and  to  bridge  gaps  with  trade  partners  on  private  expenditure  on 
investment. Some of this support does not need to be notified to the Commission. The 
Commission  stands  ready  to  assist  national  authorities  in  identifying  swiftly  such 
support measures;  

 

In  respect  of  energy  costs  faced  by  energy-intensive  industries,  Member  States  are 
encouraged  to  compensate  indirect  financing  costs  of  renewable  energy  support 
schemes.  

The  Emission  Trading  System  (ETS)  guidelines  allow  Member  States  to  offset  higher 
electricity  costs  faced  by  some  energy  intensive  industries  as  a  result  of  ETS  rules  on 
electricity generators (indirect ETS costs) under certain conditions. The Commission proposal 
for ETS reform encourages Member States to make use of this possibility. Upon request by 
individual  companies,  the  Commission  also  stands  ready  to  swiftly  provide  additional 
guidance on the competition assessment of long-term energy supply contracts. 

C.  TURNING THE RESOURCE AND CLIMATE CHALLENGES INTO OPPORTUNITIES 

More competitive energy prices in EU Member States 

Increased efforts to promote energy efficiency and competitive energy prices are key to 
competitive and sustainable energy-intensive industries.  

In the light of the recent fall in energy prices, energy costs should now be a less important part 
of  production  costs.  Wholesale  energy  prices,  the  proxy  for  energy  prices  paid  by  energy 
10 

 
 
 
intensive  industries,  are  now  at  historically  low  levels,  comparable  to  the  lowest  levels 
reached  in  the  last  decade  or  the  wake  of  the  economic  crisis12.  They  however  continue  to 
vary across Europe,  often as  a result  of taxes  and levies which are in  the hands  of Member 
States.  Relevant  energy  price  gaps  with  trading  partners  still  exist,  but  they  have  been 
evolving favourably over the past months, particularly with regard to the US. There has been 
a convergence in international energy prices and price gaps seem to be coming back to pre-
crisis levels13.  

Energy  prices  are  however very volatile and they could rise again. To contain them Europe 
needs to contain energy consumption, including by encouraging greater energy efficiency of 
its industry, and promote competitive energy prices by tapping into the potential of the single 
market and regional cooperation. To support these objectives, the Commission will soon put 
forward  several  initiatives  under  the  Energy  Union,  e.g.  proposals  on  the  electricity  market 
design,  governance,  renewable  energy  and  energy  efficiency.  The  energy  prices  and  costs 
report the Commission intends to submit in summer 2016 will also assess the predictability of 
electricity  prices  over  the  period  of  high-capital  investments  in  energy-  and  CO2-efficient 
technologies by energy-intensive sectors and further contribute to increasing transparency and 
understanding on energy costs. Different EU funding opportunities like EFSI and ESIF funds 
support  energy  efficiency.  For  instance,  the  ESIF  will  support  EU  industry's  energy 
efficiency, environmentally-friendly production processes and resource efficiency with EUR 
5.7 billion over the period 2014-2020. 

Revision of the Emission Trading System 

Innovation can help the steel sector to remain competitive and adapt to the new realities 
of climate change. 

Lower carbon cost due to less ambitious climate policies still gives a number of third country 
producers  an  unfair  competitive  advantage  vis-à-vis  their  European  competitors.  While  the 
Paris  Agreement  is  a  game  changer  and  sends  a  clear  signal  to  investors,  businesses,  and 
policy-makers that the global transition to clean energy is here to stay, the risk of competitive 
disadvantages remains. Therefore, the Commission proposes in the proposal for the revision 
of the Emission Trading System14 to distribute the free allowances in such a way that energy 
intensive  industries,  including  the  steel  sector,  receive  an  appropriate  level  of  support  and 
continue  to  reward  the  best  performers.  The  strategic  decision  by  the  European  Council  to 

12   Gas prices are now the lowest in six years (13 €/MWh). Electricity prices have been falling since the peak 
reached in 2012 (66 €/MWh). They are now at the lowest levels in twelve years (30 €/MWh). Coal prices, 
important for the steel industry, have also significantly decreased over the last few years and at the beginning 
of  2016  they  are  less  than  half  of  the  price  level  five  years  ago.  Finally,  oil  prices  recently  reached  their 
minimum in 12 years.  

13   Gas  prices  in  the  EU  now  are  twice  (2.1  in  January-February  2016),  not  four  times  those  of  the  US  as  in 
2012. EU electricity prices are now about 60-70% higher than those in the US, instead of twice as in 2012. 
As  regards  Japan,  gas  prices  are  now  slightly  above  the  EU  prices  (1.1  in  2016)  and  electricity  prices  1.8 
times the EU prices. 

14   COM (2015) 337. 

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preserve the free allocation regime beyond 2020 and the proposed carbon leakage provisions 
strike the right balance at this point of time. The proposal is currently being negotiated in the 
ordinary  legislative  procedure  and the  Commission  calls  on  the  co-legislators  to  advance  as 
quickly  as  possible  in  the  ordinary  legislative  procedure  for  the  adoption  of  the  reformed 
Emission Trading System and will provide additional input as necessary. 

In  order  to  support  investments  in  innovation,  such  as  carbon  capture  and  use  (CCU) 
technology projects, some 400 million emission allowances are proposed to be reserved from 
2021 onwards for this purpose. In addition, a further 50 million of the unallocated allowances 
from 2013-2020 (that would otherwise be placed in the Market Stability Reserve) will be set 
aside  to  enable  the  Innovation  Fund  to  start  before  2021  and  fund  projects  to  support  the 
uptake of new breakthrough technologies in industry.  

Closing the loop: the circular economy 

Recycling  raw  materials  must  reduce  costs  of  production  and  the  impact  on  the 
environment. It will open up new areas of business, encourage product development and 
create jobs.  

Steel scrap is used by almost half of the current EU primary steel production, making the EU 
a  global  frontrunner  in  steel  recycling.  The  production  from  scrap  makes  producers  more 
independent from raw material imports. As the biggest part of production costs for recycled 
steel  is  the  cost  producers  pay  for  ferrous  scrap,  an  improved  EU-market  for  scrap  metal 
makes  such  production  more  competitive.  Since  their  adoption  in  2011,  the  end-of-waste 
criteria for iron and steel scrap have helped stimulate higher demand for recycled steel.  

With  the  Circular  Economy  package  the  Commission  has  proposed  to  increase  waste 
recycling  rates  and  sorting  systems  for  construction  and  demolition  waste,  and  improve  the 
functioning  of  the  Extended  Producer  Responsibility  schemes.  It  will  develop  targeted 
guidelines for use on demolition sites and facilitate the shipment of waste between Member 
States.  These  measures  should  result  in  more  efficient  supply  chains  and  help  create  a  real 
single market for secondary raw materials.  

Moreover,  the  Circular  Economy  package  contains  several  measures  aiming  to  incentivise 
innovative  industrial  processes.  For  example,  industrial  symbiosis  allows  waste  or  by-
products of one industry to become inputs for another and in the process creating new market 
opportunities.  By  stimulating  these  processes,  the  package  will  help  increase  material  and 
energy efficiency of industrial processes and increase cost-competitiveness by facilitating the 
valorisation  of  by-products  such  as  steel  slag  rather  than  imposing  heavy  disposal 
costs.  Another example is the use of the content of blast furnace waste gases through carbon 
capture and utilisation. 

But  the  EU  is  also  taking  significant  steps  to  increase  transparency  in  international  raw 
materials markets and in related derivative markets, not least for critical raw materials with a 
high risk of supply shortage.  

3.  CONCLUSIONS 

The  European  steel  industry  is  facing  a  number  of  serious  challenges,  fuelled  by  global 
overcapacity,  a  dramatic  increase  of  global  exports  and  an  unprecedented  wave  of  unfair 

12 

 
 
trading  practices.  The  Commission  is  aware  of  these  challenges  and  is  taking  swift  and 
determined action  in  a number of policy areas. While it is  the responsibility of the industry 
itself  to  adapt  and  innovate  in  order  to  face  these  challenges  in  a  sustainable  way,  the 
European Union and its Member States can support these efforts by preserving a level-playing 
field, promoting investment, particularly in a skilled workforce, and by creating a favourable 
business  environment.  Involvement  and  regular  consultation  with  all  stakeholders  in  a 
structured way, including at the local level, is particularly important in this context.  

The  Commission  is  acting  with  determination  to  respond  to  unfair  trade  practices  resulting 
from global overcapacity. In addition to the current record-level of trade defence measures in 
place, it will pursue additional avenues to accelerate the adoption of such measures. The co-
legislators  should  urgently  adopt  the  Commission's  trade  defence  modernisation  proposal. 
Additional reforms will be proposed to further increase the effectiveness of these instruments. 
The Commission intends to put in place a prior surveillance system on steel products. These 
further efforts will however only be successful with the support and action from the Member 
States, the other EU institutions and bodies and the industry itself.  

The  long-term  challenges  of  the  steel  sector  will  not  go  away.  A  range  of  investment 
instruments  and  focused  policies  in  areas  like  trade,  innovation,  competition  or  the  Energy 
Union  will  help  the  steel  industry  to  compete  through  innovation,  resource  efficiency, 
modernisation  and  reform.  Best  and  swift  use  needs  to  be  made  of  all  these  instruments 
provided by the European Union.  

Finally, modernising the steel industry is also about investing in people. Many of the tools in 
that area lie in the hands of Member States, but the Union will provide substantial financial 
and other support, including through the European Social Fund and, should rapid employment 
reductions  become  necessary,  through  the  European  Globalisation  Adjustment  Fund  which 
supports  the  reconversion  of  redundant  workers.  With  the  forthcoming  New  Skills  Agenda, 
the Commission will aim to build a shared commitment to invest in people and their skills, in 
close cooperation with Member States and social partners. 

The  current  challenges  for  the  steel  industry  are  serious,  but  they  can  be  overcome  if  all 
players  work  together  in  a  spirit  of  sincere  cooperation.  The  Commission  will  keep  the 
situation  of  the  steel  industry  under  close  review,  stands  ready  to  take  further  action,  as 
necessary,  and  calls  on  Member  States  to  support  the  joint  European  efforts  and  initiatives 
with a greater sense of urgency. There is no time to lose if we want to preserve sustainable 
jobs and growth in Europe. 

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