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Ref. Ares(2020)5277096 - 06/10/2020

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Moreover, representatives of the energy intensive industries are involved with DG GROW in 
the High Level Expert Group dealing with issues related to competitiveness and 
decarbonisation. The three guests mentioned above are also members of the High Level 
Expert Group on Energy Intensive Industries. 
The position paper of the High Level Expert Group and the minutes of the last meeting held in 
DG GROW on May 3 2018 are attached to this briefing. The expert group also submitted a 
summary of each sector strategy; however it is more difficult to reach a common position (due 
to, e.g., issues of material substitution). 
Speaking points for opening statement 
x  Dear CEOs, dear Chairmen, dear Presidents, dear Member of Management Boards, 
dear Director Generals, dear participants, dear colleagues, 
x  Before the introductory remarks of Commissioner Miguel Arias Cañete, let me 
welcome you to this high-level brainstorming event having this informal exchange 
with you is part of our efforts towards a cost-efficient decarbonisation of our 
economy. 
x  However, let me clearly state that the benefits of the energy transition go beyond the 
decarbonisation challenge. It is a great opportunity for greater energy security, 
competitiveness, investments, growth and jobs as well as improved living conditions 
and comfort. 
x  And we know that this is possible! From 1990-2016, CO2 emissions decreased by 
23% while GDP grew by 53% showing the successful decoupling between economic 
growth and CO2 emissions.  
x  Investments in renewables and energy efficiency as well as in the modernisation and 
integration of European energy markets, are essential for the decarbonisation of EU 
economy. But most importantly for the creation of growth and jobs all over Europe, 
and for the Union's global competitiveness, as the technological advantage these 
investments sustain will be essential for Europe’s industry. 
x  A stable and performant regulatory framework is key to channeling such investments, 
and the EU is the most advanced in this respect, thanks to the Clean Energy for All 
Europeans  
proposals for which the inter-institutional negotiations are quickly 
progressing. What is needed next, is a strategy to reinforce the industrial basis 
underpinning the clean energy transition. 
x  The energy transition and a strong EU industrial base are mutually reinforcing: the 
energy transition creates new opportunities for the industry, in particular in the 
construction and engineering sectors. At the same time, many industrial sectors can 
contribute to the energy transition through more efficient use of energy, production of 
equipment and innovative solutions to curb emissions, improving thus also EU 
industry's global competitiveness. 
x  Energy Intensive Industries are and will always be playing a crucial role in this 
context: 

 

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x   
The sector represents an important part of the European economy and the steel 
and aluminium sector alone employ more than half a million people in the EU. 
x   
Today, Energy Intensive Industries consume approximately 16% of the EU 
total final energy consumption.  
x   
They also face higher share of energy costs in their production costs (10% as 
compared to 3% on average). 
x  In a rapidly evolving energy and industrial landscape, the EU will  defend existing 
industrial capacity in Europe to deliver durable high-quality products, corresponding 
to the highest safety standards relevant for the wider economy (in sectors such as steel, 
aluminium, copper, chemical / petrochemical products, automobile industry, 
refineries, etc.). 
x  Europe should be capable to make the best products which contribute to reducing 
emissions while creating growth and jobs and being competitive at global level thanks 
to improved energy efficiency and synergies stemming from a broader deployment of 
innovative low carbon technologies. 
 
x  The Commissioner Miguel Arias Cañete will now give introductory remarks.In the 
meantime, please enjoy your breakfast. 
 
*** 
 
 
x  Decarbonisation of the European economy will not happen in isolation, but rather in 
the context of meta-trends that will reshape the world economy. Examples of these 
trends are: the ageing population, digitalisation, shifting of the global centres of 
gravity. 
 
x  As an example of these meta-trends, China increased steel production by more than 
85% between 2007 and 2015. Imports of aluminium from China to the EU increased 
by approximately 52% between 2008 and 2014. In the meanwhile, following the 
recession of 2009 production of both steel and aluminium decreased in the EU with 
only a weak recovery in the following years. 
 
x  However, in the context of global economic growth, we expect the value added of the 
industrial sector in the EU to keep increasing until 2050. As the industrial sector 
continues to expand, energy intensity will further decrease. In 2050, it will take half 
the energy needed in the year 2000 to produce the same value added. On the other and, 
industry will use almost one quarter more electricity in 2050 compared to 2000. 
 
x  The LTS will set out our vision for a decarbonised Europe in a changing world. 
Contributions to the LTS 
x  Every sector of the economy will contribute to the LTS starting with the power sector 
that will be the first to decarbonise. 

 

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x  The vision for Europe's industry will be based on your input. We look forward to a 
fruitful cooperation with you using the channels already established (for example, the 
High Level Expert Group on Energy Intensive Industries). Special attention should be 
given to complementary concepts such as the circular economy and bio-based 
economy. 
 
x  A similar inclusive approach will be used to compile the visions for the other sectors: 
services, agriculture, transport. 
Enabling factors 
x  Several different elements need to be considered to put the strategy in place: 
1.  A clear strategy is needed to support innovation by pooling resources. This is 
particularly relevant for industry as new technologies will be needed to 
decarbonise some industrial processes. 
2.  Investments will be substantial and the analysis prepared by the Commission 
will help quantify the needs. It will then be necessary to explore intelligent 
ways of financing the transition and to avoid overstretching public and private 
finances. 
3.  Public finance can play a strategic role in leveraging and focusing private 
investments. 
4.  Trade and geopolitical issues should be taken into account, e.g., to avoid unfair 
competition. Decarbonisation will reduce Europe's dependence on fossil fuels, 
but scarcity of other raw materials may become an issue. 
Questions to frame the discussion: 
x  What are the main meta-trends (ageing population, digitalisation, shifting of the global 
centres of gravity) that will affect the European industry in the coming decades. How 
will these meta-trends interact with the Paris-compliant long-term Decarbonisation? 
x  We anticipate a coupling between power generation and final energy demand sectors. 
Industry, for example, benefits from the decarbonisation of the power system. What 
are the main opportunities and hurdles of increased sector coupling? 
x  The Long-Term Strategy will shed light on the main technological gaps for 
decarbonisation of industry. What are the main gaps that you see, technological, but 
also regulatory? 
 
 
 

 

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Defensive points: 
How can the European Union guarantee a level playing field for the European Industry in the 
context of decarbonisation? 

A level playing field can be assured by promoting global climate action. The Paris Agreement 
is also an international treaty establishing commitments on ratifying parties according to their 
level of development. Finally, proactively leading the energy transformation is the best way to 
ensure a competitive advantage. 
How can industry inform the vision for the LTS? 
The Commission is stepping up its effort to gather stakeholders input for developing an 
inclusive vision for the Long-Term Decarbonisation strategy. Industry can provide inputs in 
several ways, notably via the upcoming public consultation and through the platform of the 
High Level Expert Group on Energy Intensive Industries. Officers from Dg ENER working 
on the LTS will be directly involved in the works of the High Level Expert Group. But having 
in mind the deadlines, we need input quickly. 
How can industry get advice/information from the Commission on issues related to the LTS 
(such as long-range forecasting,…)? 

The Commission is stepping up its efforts to disseminate assumptions and background 
information relative to the preparation of the LTS. Making sure that each stakeholder receives 
the relevant information can be a difficult task. I recommend you to reach out to Commission 
staff through established platforms such as the High Level Expert Group. 
 
 
Minutes of the meeting of the Commission High Level Expert Group on Energy 
Intensive Industries (EIIs): 

3 May 2018 
Brussels, 4 May 2018 
Minutes 
 chaired the meeting with industry associations and DGs ENER, CLIMA, RTD, 
ENV, GROW and the SG (list of participants attached) on the work to develop a consolidated 
2050 strategy for the EU’s energy-intensive industries, which should contribute to the EU’s 
low emission strategy for 2050. 
Discussion 

 

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Then chair took stock of the latest meetings. He asked the EIIs to present their work so far and 
explained that the purpose of this meeting was to see what questions the EIIs had for the 
Commission services and vice versa.  
On behalf of the EIIs 
 presented their discussion paper (attached), noting the 
importance of EIIs at the heart of value-creation in Europe. EIIs have already made major 
efforts to reduce their carbon intensity and are quickly approaching the technical limits of 
current technologies. Further significant emission reductions will require transformational 
changes as well as the development and deployment of innovative technologies and solutions, 
which all sectors are actively working on. The full investment costs of the transition would 
require up to four-digit billion of Euros. This is an unprecedented challenge within a relatively 
short time horizon. Energy, feedstock and infrastructure represent another essential pre-
requisite to support the industry transition. The strategy should be sufficiently flexible and 
address also the international dimension, taking into account the emission reduction 
contributions of extra-EU countries. This is essential to ensure the environmental integrity as 
well as the competitiveness dimension of the strategy. 
EIIs sectorial low-carbon roadmaps, visions and pathways have identified, among others, the 
following key CO2 abatement options: 
• 
Energy and Materials Efficiency 
• 
Increased use of low-carbon and carbon-neutral energy sources (electricity, hydrogen, 
bioenergy) 
• 
Alternative feedstock including carbon (Carbon Capture and Utilisation), waste, 
secondary raw materials and bio feedstock 
• 
Integrated process management 
• 
Carbon Capture and Storage 
• 
New materials and products 
The identified abatement options will require significant availability of: 
• 
Secure and affordable low-carbon and carbon-neutral energy carriers (electricity, 
hydrogen, bioenergy), 
• 
Feedstock and raw materials (biomass, CO2, gas, hydrogen, alternative materials and 
fuels), 
• 
Infrastructures (e.g. electricity networks, hydrogen grid, CCS pipelines and storage) 
• 
Evolution of energy prices will affect abatement choices. In the scenario of highest 
electricity uptake by 2050, our sectors could require an additional amount of electricity (four-
digit TWh), which is more than the whole electricity supply estimated by the IEA (IEA World 
Energy Outlook 2015, 450 ppm scenario). 
 
The enabling regulatory framework would have to address the following main elements: 

 
















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• 
Ensure industrial competitiveness by addressing direct and indirect costs caused by the 
lack of an international level playing field, in particular in the field of climate, energy, 
environmental and trade policies. 
• Secure 
public 
financing 
in 
industry 
research and innovation at EU, national and local 
level, to upscale technologies to commercial level, to support their market uptake and to 
address the first mover disadvantages as well as the impact on the value of existing assets  
• 
Secure supply of competitively priced, carbon-neutral energy. This includes: 
 
Develop a comprehensive strategy for the development of a full range of low-
carbon 
 
and carbon-neutral energy carriers and related infrastructures and storage 
 Ensure 
an 
adequate 
regulatory 
framework for Power Purchase Agreements 
(PPAs) 
 
and long-term power contracts 
 
Value industry’s role in balancing the profile of electricity markets 
• 
Promote industrial symbiosis and circular economy, via: 
 
Developing a raw and secondary materials strategy 
 
Securing a proper accounting of CO2 emissions across sectors and value-
chains 
• 
Stimulate the market uptake of low-carbon, innovative products and solutions. 
Individual EIIs expressed the need for inputs from the Commission services on overall 
landing zones (GDP forecasts, etc.) and in particular availability of key resources (energy, 
etc.). They also asked for advice on long-range forecasting, regional mapping of industry, 
infrastructure and CCS potential as well as on depreciation of existing assets. 
The Commission services (CLIMA, ENER, GROW) indicated that it would be useful if the 
EIIs input to the 2050 strategy addressed the following elements: 
 Latest 
sectorial 
roadmaps 
 
individual technologies that could be used 
 
information on sectorial interactions 
 
 
Key challenges and opportunities 
 Key 
bottlenecks 
 
 
 
Resource/material efficiency and circularity as vectors for decarbonisation 
 
potential for value chains that would reduce investment costs 
 
shift from product production to services with product dimension 

 


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non-energy raw materials needs 
 (RTD) mentioned the Commission’s recent MFF proposal, 
which foresees an allocation for Horizon Europe of 100b EUR, a major increase on H2020. 
This would include a strong industrial focus. Regarding foresighting, RTD proposed to look 
into the existing studies by RTD on 2050 and the Bohemia study. 
 (ENV) noted that 2050 should envisage a circular economy world, asked 
EIIs to incorporate other aspects such as product lifetime extension policies and asked EIIs to 
reflect on what policies Commission should pursue internationally.  
 
The chair addressed the timing, i.e. by November the Commission intended to present a 
strategy for discussion with stakeholders, but this is part of a process that would lead to the 
EU presenting its strategy by the 2020 deadline set in the Paris Agreement. This meant that 
the Commission services would prefer to receive a first consolidated and sectorial input by the 
summer, which would be discussed with other EII HLG stakeholders after the summer. The 
Commission services would already like to see the raw data being collected by the EIIs, 
recognising that it was based on differing underlying assumptions. The collective work would 
need to continue after this initial phase.  
He noted that it could be useful to involve the electricity, hydrogen and waste sectors once the 
EII work was more advanced. He also indicated that DG GROW planned to extend its 
interservice group to cover those services responsible for inter alia investment, trade, 
competition and regional policy. 
Next steps 
• 
GROW to send minutes with participation list and latest version of a summary of the 
EIIs’ existing 2030/2050 roadmaps (Annex II). 
• EIIs 
to 
provide 
individual 
roadmaps 
and further sectoral information as soon as 
possible. 
• 
DG RTD to provide information on foresighting as soon as possible. 
• Extended 
interservice 
meeting 
(Commission 
services only) including the core group 
and ECFIN, FISMA, COMP, TRADE, JRC, REGIO, EMPL, MOVE and EPSC (early June). 
• Follow-up 
meeting 
involving EIIs and core group of Commission services (late June) 
Overview of the Steel sector: 
 
The steel industry is an energy-intensive industry, consuming three main energy carriers, 
ranked in the following order: coal, natural gas and electricity. Total crude steel 
production in the EU-28 amounted to 166 million tonnes in 2015. In 2015, six countries 
– Germany, Italy, France, Spain, the United Kingdom and Poland – accounted for more 
than two-thirds of total EU crude steel production. 

 


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In 2016, the European steel industry directly employs 335,000 people. In general, 
approximately 218,000 people are employed by large steel producing companies. 
The steel sector is characterized by economies of scale and scope, and achieving 
economies of scale for new producers requires mass production of steel. Therefore, along 
with new technologies and the privatisation of major European steel industries in the 
1990s, a wave of takeovers and mergers occurred. As a result of the consolidation in the 
European steel industry relatively few companies account for a large share of steel 
production. 
Steel production in the EU decreased by roughly 21% between 2007 and 2015, Asian 
countries, especially China, increased their production by more than 85% over the same 
period, satisfying both internal and external demand. Between 2008 and 2009, steel 
production dropped by roughly 30% in the EU and North America, and underwent a 
weak recovery in the three following years. After Asia, the global leader with a share in 
2015 of 68% global production, the EU ranks second (10%), followed by North America 
(7%) and CIS (6%). The EU, North America, CIS and Asian countries account for more 
than 90% of world steel production. 
Figure 1 Crude steel production, 2001-15 (million tonnes) 
 
 
EU trade in iron and steel is still – though to a lesser extent than pre-2012 – represented 
by intra-EU flows. In 2012, intra-EU trade accounted for 72% of total trade, while only 
28% of trade was directed towards extra-EU economies. The same trend is observed with 
regards to imports: 74% of imports comes from the EU and 26% from outside EU 
borders.  
Figure  2 shows the export and import trade volumes of EU basic iron, steel and ferro-
alloys products. In 2014, the EU exported the largest volumes (roughly 5 million tonnes) 
of iron and steel to Turkey and the United States. 

 


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Figure 2: EU export and import volumes of basic iron, steel and ferro-alloys with the 10 
most relevant G20 countries (in terms of volume) from 2008 to 2014 
 
 
The competitiveness of the EU steel industry is highly affected by exchange rates. When 
the euro appreciates significantly (such as in 2006-07), exchange rates put a lot of 
pressure on the EU steel industry. Moreover, the European steel industry has been facing 
since several years an unprecedented wave of distorting trading practices. 
Overview of the Aluminium sector: 
 
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In 2012, 2.1 million tonnes of primary aluminium and 4.1 million tonnes of secondary 
aluminium were produced in the EU-27. In 2015 primary aluminium production was 
slightly higher at 2.2 million tonnes. The largest energy input (and one of the larger cost 
components) in the production of primary aluminium is by far electricity, followed by 
fossil fuels. Aluminium can also be recycled indefinitely to produce secondary 
aluminium. 
As of the beginning of 2016, there were 16 primary aluminium smelters active in the EU, 
run by 10 different companies. The secondary aluminium plants located in the EU 
amounted to 209. The aluminium industry is the largest of the non-ferrous metal 
industries in the EU directly employing a workforce of around 255,000. 
The total production value of aluminium dropped in all Member States in 2009, with 
only Poland and Germany showing significant growth between 2010 and 2014. 
Production values in Member States such as Greece, Italy and Spain have not yet 
recovered from the crisis, though all grew slightly between 2013 and 2014. 
The EU is a net importer of aluminium and net-imports account for 54% of all aluminium 
processed in the EU. Over 87% of imports of aluminium wires in 2013 came from just 
three countries: Iceland (70.000 tonnes), Norway (59.000 tonnes) and Russia (57.000 
tonnes). 
Table 1 and Table 2 show two snapshots of the trade between the EU and the rest of the 
world in aluminium products; one for 2008 and one for 2014. It is clear that the EU is a 
significant net importer, though the gap between exports and imports has narrowed 
somewhat since 2008. The export values in Table 39 show three main export markets 
that account for over 35% of total exports: Switzerland, USA (13% of total export by value 
in 2014) and China. These three countries also figure in the list of main importers to the 
EU (with 4.3% of total imports coming from the USA). 
 
Table 1: Exports of aluminium and articles thereof between the EU and main trade 
partners (2008, 2014, in USD), sorted by export value in 2014 2008 201 
 
 
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Table 2: Imports of aluminium and articles thereof between the EU and main trade 
partners (2008, 2014, in USD), sorted by import value in 2014 
 
 
Energy costs for Energy Intensive Industries such as steel and aluminium  
Energy costs play a modest role in the total production value of the economy in Europe (a 
bit more than 2% for industry, less than 2% for services). 
Energy cost are however important for energy intensive industries (~2% of the GDP; with 
steel and aluminium representing together 0.21% (0.15% steel and 0.05% aluminium)), 
specifically in segments of these industries exposed to international competition such as 
primary steel, primary aluminium, refineries, etc. 
The 2016 energy prices and costs reports report shows that energy costs represented on 
average 5-20% of production costs for energy intensive industries (~ 8% for steel and 
aluminium)[1] and that some years in some industries can reach up to 40% of the 
production costs (27% in some cases for steel).  
This justifies the need for compensatory measures for these industries to ensure a level 
playing field (free ETS allowances, State aid for indirect cost of electricity). 
 
                                                            
[1] Note that the sector statistics include firms producing steel products with different value added and 
following different production processes (e.g. BF or EAF). The averages of the sector represent the 
industry as a whole and might not be fully representative of concrete processes in the sector, which 
may have different sensitiveness to energy cost 
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Figure 4 Absolute and relative changes in main production cost components for iron and 
steel sectors (2008-2013 and 2011-2013) 
 
 
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