24 June 2021
Cost impact of the EU ETS on the steel industry in phase 4 – with and without CBAM
The following calculations are based on the model Guidehouse Carbon Cost Calculator (formerly Ecofys/Navigant)
and the assumption of annual EU steel production of 162 million tonnes.1
Without the necessary investment in decarbonisation projects, the EU steel will emit approximately
• 200 Mt direct CO2 emissions p.a., or 2 billion t CO2 in the period 2021-2030
• 33 Mt indirect CO2 emissions equivalent p.a., or 330 Mt in the period 2021-2030
Impact of the ETS with 100% free allocation at benchmark level, without CBAM and without cross sectoral
correction factor
Without a potential CBAM reduction on free allocation, and without the cross sectoral correction factor, the steel
sector would already face in the period 2021-2030 a
• shortage of 426 Mt for direct CO2 emissions
• shortage of 180 Mt for indirect CO2 emissions
This shortage results already under current rules in the period 2021-2030 in total direct and indirect
• costs of 30 billion €, if the carbon price is constant at 50€/t until 2030, or
• costs of 45 billion €, if the carbon price increases linearly from 50€/t in 2021 to 100€/t in 2030 (increasing
the annual costs from 2.9 billion € in 2021 to 6.3 billion € in 2030)
The costs per tonne of primary steel would be in the period 2021-2030, on average:
• 24€/t, if the carbon price stays constant at 50€/t until 2030, or
• 36€/t, if the carbon price increases linearly from 50€/t in 2021 to 100€/t by 2030
In comparison, average annual EBIT of EU primary steel in the period 2016-2019 was at around 2%, or 10 €/t steel. 2
Impact of the ETS with a CBAM and reduced free allocation and indirect costs compensation
If free allocation and indirect costs compensation are further reduced, for example, to 80% of the benchmarks in the
period 2023-2030, the steel sector would face a
• shortage of 74 Mt for direct CO2 emissions p.a., and 675 Mt in the whole period 2021-2030
• shortage of 21 Mt for indirect CO2 emissions p.a., and 200 Mt in the whole period 2021-2030
Such shortage would result in the period 2021-2030 in total direct and indirect
• costs of 44 billion €, if the carbon price is constant at 50€/t until 2030, or
• costs of 67 billion € in the period 2021-2030 if the carbon price increases linearly from 50€/t in 2021 to
100€/t in 2030 (increasing from 2.9 billion € in 2021 to 9.7 billion € in 2030)
The costs per tonne of primary steel would be in period 2021-2030, on average:
• 37€/t (increasing to 42€/t in 2030), if the carbon price is constant at 50€/t until 2030, or
• 58 €/t (increasing to 85€/t in 2030), if the carbon price increases linearly from 50€/t in 2021 to 100€/t in
2030
1 92 Mt BF/BOF steel, 70 Mt EAF steel in 2021, 86 Mt BF/BOF, 76 Mt EAF steel in 2030.
2 Reference profitability for primary steel – Source: Commission Implementing Regulation 2021/9 imposing provisional
antidumping duties on imports of hot rolled coils from Turkey; Reference period: average 2016-2019; Hot rolled coils prices: ±
500€/t; Profit (Earnings before interest and taxes): ± 2%, i.e. 10,60 €/t
The European Steel Association (EUROFER) AISBL | Avenue de Cortenbergh, 172, 1000 Brussels, Belgium
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