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Climate Action in Europe
Our carbon emissions reduction roadmap:
30% by 2030 and carbon neutral by 2050
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ARCELORMITTAL CLIMATE ACTION IN EUROPE 2020
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Our commitment
Climate change is one of the greatest
We have spent the last few years testing
“ Steel has the potential to
challenges facing us all. With global emissions
technologies to produce steel in a carbon neutral
continuing to rise and extreme weather
way. As outlined in our first global climate action
be made without carbon
occurrences intensifying, we cannot afford
report published in 2019, we have identified
to ignore it. Much of this report was written
different technology pathways which offer
emissions. But that wil not
before the outbreak of Covid-19 that we now
the potential for significant carbon emissions
happen without the right
find ourselves in the midst of. Solving the
reduction. These range from circular carbon in
Covid-19 problem is clearly everyone’s first
the form of renewable biomass and bio-waste;
policy. The time is now and
priority at present and despite the many
clean electricity; to carbon capture and storage.
uncertainties that exist today, I hope that
we cannot afford to fail.”
These technologies have the potential to make
path will become clearer in the coming months
a big impact. And with our plans for rol ing them
and progress is made with the development of a out across Europe, we are taking important steps
vaccine and other treatments.
forward. But we can’t do it alone. We need the
Climate change, however, remains a huge long-
support of the EU and member states to ensure
term chal enge that will require diligent attention
we have well-designed policy, including available
and progress for decades to come. And like
finance, access to alternative clean energy sources
Covid-19, it is not something that one country
at competitive prices and public guarantees on initial
or one company can solve alone. As we discuss in
ramp-up projects. Furthermore, a carbon border
this first climate action report for Europe, carbon
adjustment is required to support a successful
emissions also know no border, so it will take
transition to low-carbon steelmaking during the
a global effort, with all nations and companies
implementation of the EU’s Green Deal, while other
playing their part.
regions may not be working at the same pace.
Leaders will emerge; and Europe has stepped up
With this approach, we can make a difference: steel
to the chal enge by making a clear commitment
is an incredible material. It is strong, versatile and
to be carbon neutral by 2050. As the continent’s
infinitely recyclable. It has the potential to be made
leading steel company, we have a significant role
without carbon emissions. With these credentials,
to play. We are committed to the transition to
steel should and can play a leading role in achieving
carbon-neutral steelmaking, in line with the
the vision for Europe as outlined in the Green Deal.
Paris Agreement and the EU’s commitment. Last
But that will not happen without the right policy.
year, we announced a target to reduce carbon
The time is now, and we cannot afford to fail.
emissions in our European operations by 30% by
2030, with a longer-term ambition to be carbon
neutral by 2050.
Significant work is underway. By far the largest
component of steel’s carbon emissions come
Aditya Mittal
from using coal and coke in the blast furnace
President and CFO, ArcelorMittal,
to reduce oxygen from iron ore.
and CEO ArcelorMittal Europe
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ARCELORMITTAL CLIMATE ACTION IN EUROPE 2020
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Our roadmap
D
ArcelorMittal Europe has committed to
for the large-scale, affordable, renewable energy
S
R
m
I
Smart Carbon
C ar
includes:
reduce CO2 emissions by 30% by 2030, with
needed for hydrogen-based steelmaking. We wil
I
a
t
nc
r
r
b
e
o
a
o
f
s
n
a further ambition to be carbon neutral by
reduce our European Scope 1 CO
s
e
2 intensity by
c
d
r
a
u
p
s
e
stee
2050, in line with the EU’s Green Deal and
30% by 2030, over a 2018 baseline (see page 12).
l
Carbalyst®
the Paris Agreement. As Europe’s largest
We believe it is prudent to pursue both routes
w
ith
steelmaker, with blast furnace, electric
n
Torero
a
because of the technological and economic
N
tu
e
r
arc furnace and direct reduced iron (DRI)
w
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uncertainties, the scale of the chal enge, and the
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operations across seven countries, we have
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political and natural variations between countries
o i
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a significant role to play in contributing
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to the EU’s green ambitions.
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available to invest in the vast energy infrastructure
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h
With the right support, reducing carbon emissions
needed to achieve carbon-neutral steelmaking.
hydrogen
is certainly achievable, but there is no denying
with
We have committed more than €250 mil ion towards
hydr
it represents a significant chal enge. Making
ogen
carbon-neutral technology via both routes to date,
DRI
steelmaking carbon neutral is complex and wil
includes:
leveraging our R&D facilities around the world, and
cost bil ions of euros.
the support of public funding. The progress we are
ArcelorMittal
Hamburg
To transform our operations to become carbon
making gives us confidence some technologies
hydrogen
project
neutral, we need to move primary (iron ore-based) could reach commercial maturity before 2025,
steel production away from a reliance on fossil fuel but scaling this up will require continued public
energy, towards the use of “clean energy” – in the
funding, given the bil ions of euros needed to
form of clean electricity, circular carbon, and
achieve large-scale carbon-neutral steelmaking.
carbon capture and storage (CCS).
In the medium term, our 2030 target will be
we believe many of our Smart Carbon technologies abatement route is much higher cost today than
To enable us to use these clean energies, we are
achieved through the partial deployment of Smart
will be mature and partial y deployed across our
Smart Carbon and it is unlikely that enough progress
pioneering two breakthrough carbon-neutral
Carbon as well as developing new ways to increase
facilities in Europe.
will be made for it to play a meaningful role before
technology routes: the first, we call Smart Carbon
the use of low quality scrap metal in our primary
2030. Beyond 2030, we do expect Hydrogen DRI
Although CCS is not yet a major contributor to
and the second is an innovative DRI-based route.
steel production process.
technologies to feature more, and in anticipation
our 2030 target, it is quite conceivable that
of this, we are creating one of Europe’s first
Both routes will benefit from a shift towards
One of the most attractive elements of the
within a decade, progress will be made on its
industrial-scale DRI plants that uses hydrogen for
hydrogen in the long term. The important
Smart Carbon route is that it features a number
deployment. We believe this technology has an
the direct reduction of iron ore, instead of natural
difference is the evolution and commercial viability of complementary technologies which enable
important role to play in enabling a net-zero
gas. We are also testing the increased use of
of the Smart Carbon technology route in the
incremental progress and can be combined
economy and in the medium term, while we await
hydrogen in the Smart Carbon route.
medium term, and the added value this can bring
to deliver additional value. These include Torero
sufficient amounts of clean energy to produce
to the low-emissions circular economy.
(turning waste wood into bio-coal to replace coal
green hydrogen, CCS could offset the continued
The road ahead is not straightforward, but with
as a reductant in ironmaking); IGAR (making
use of fossil fuels, such as natural gas, be it via the
cross-sector col aboration and supportive public
We believe pursuing both routes to carbon
synthetic gas from waste CO2 as a replacement for Smart Carbon route or the DRI route.
policies, to scale up the technologies and ensure
neutrality is an advantage, as it means we can
fossil fuels); and Carbalyst® (converting off-gases
the large-scale deployment of clean energy
significantly reduce our scope 1 CO2 emissions,
In summary, while there is no doubt that innovative
into bio-ethanol). Based on market conditions
infrastructure, we know we can transition to
which include all process emissions, by 2030 (see
DRI technology – particularly when using green
today, the Smart Carbon route is less capital-
carbon-neutral steelmaking and play a significant
Basis of Reporting, page 12) without having to wait
hydrogen – also offers huge potential, this
intensive than the innovative DRI route. By 2030,
role in helping Europe achieve its climate ambitions.
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The transition to clean energy
Today, primary (iron-ore based) steel production relies on fossil fuel-based energy sources that emit CO2. We recognise the vital need to transition to clean energy to be carbon neutral. This clean energy
wil be in the form of clean electricity, circular carbon and carbon capture and storage (CCS). Alone, each of these three clean energies can in theory be carbon neutral. But the reality is that the scale of
investment in the infrastructure that will deliver clean electricity, circular carbon and CCS is different, and the availability and access to them varies. As a result, we will use different combinations of these
three clean energies to reach carbon neutrality. This means we can move faster to reduce our CO2 emissions. And where we deploy circular carbon technology, not only will we produce carbon-neutral
steel, we could also put steelmaking at the heart of the circular economy by avoiding CO2 emissions from other industries: we will create recycled carbon materials to replace polyethylene-based plastics.
And, through creating a carbon-neutral primary production process, we could generate carbon-neutral slag (a direct substitute for cement).
Circular carbon means we can achieve carbon neutrality by relying on the earth’s natural carbon cycle and making
use of biowaste materials, such as sustainable forestry and agriculture residues, to produce bioenergy for steelmaking.
Circular
Additional y, using waste plastics as the source of energy, in combination with our carbon capture and use technology,
carbon
we can convert carbon that would otherwise be emitted as CO2, into hydrocarbon liquids (ethanol) or solids (plastics).
This creates a carbon-neutral, circular carbon cycle while addressing society’s waste chal enge with plastics. If the
European steel industry switched to using bioenergy, around 200-250 mil ion tonnes of biomass and waste would be
needed each year. Additional y, the steel industry would be producing up to 30% of today’s plastic needs in a carbon-
neutral way. Although today it is not technically possible to make a complete shift to bioenergy, the investment
in a clean energy system to transition the entire European steel industry to bioenergy is estimated at €50-70bn.
Clean electricity is a carbon-neutral energy that comes from sources such as solar and wind energy, that do not
emit CO2. For the steel industry, clean electricity can be used by extracting hydrogen from electrolysis of water. This
hydrogen is then used to reduce iron ore into iron. While innovations should drive costs down, the timetable remains
unclear and it is likely to be decades before clean electricity and hydrogen are available on a scale and cost that would
benefit the steel industry. If the European steel industry ful y switched to clean electricity today, this would imply
a 15% increase in power consumption. The energy infrastructure investment needed to move the entire
Clean
Carbon
European steel industry to clean electricity via hydrogen would be €450-700bn.
Low-emissions
capture and
electricity
steelmaking
storage
Carbon capture and storage (CCS) technology captures CO2, transports it and stores it safely underground.
Avoiding emissions from fossil fuels renders industrial processes such as steelmaking carbon neutral. The North Sea
basin alone is estimated to have up to 300,000mt of CO2 storage capacity. Longer term, combining CCS with circular
carbon can move the industry beyond carbon neutrality, turning the steel industry into an agent to remove CO2 from
the atmosphere. If the entire European steel industry became carbon neutral through CCS, we estimate 150-200
mil ion tonnes of CO2 transport and storage would be needed annual y, needing investment of €100-150bn in
clean energy infrastructure.
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Smart Carbon
carbon-neutral cement and carbon-neutral
complemented with CCS. Later, as the hydrogen
The Carbalyst® process provides the building
biomaterials – this is what we call Smart Carbon.
economy evolves and cost-effective hydrogen
blocks the chemicals industry needs to produce
We are developing a carbon-neutral steelmaking
Smart Carbon can also use CCS to capture any
becomes available, we wil transition to Hydrogen
these recycled carbon materials.
route that leverages all clean energies within
CO2 emissions from remaining fossil fuels and
Smart Carbon, where hydrogen – increasingly
the high temperature-control ed reduction
We estimate the cost of deploying Smart Carbon
ensure the process remains carbon neutral.
green hydrogen made with clean electricity –
environment of ironmaking. Since the high-
across ArcelorMittal Europe is €15-25bn.
becomes a key reductant in the process.
temperature gas used to reduce iron ore can be
Initial y the Smart Carbon route will focus on
Additional y, investments of €15-30bn would be
either predominantly carbon or hydrogen, this
leveraging sources of circular carbon from waste
Smart Carbon uses end-of-life plastic packaging
needed to build the clean energy infrastructure
route is flexible to adapt as the external energy
streams, and then capturing the resulting carbon
and textiles and wastes to create bioenergy.
to enable bioenergy and CCS-based Smart Carbon.
infrastructure evolves. This route has the potential emissions for reuse or storage. During this phase,
A carbon-neutral cycle is then created by using
not only to provide carbon-neutral steel, but also
natural gas can also be used in the process as
carbon from end-of-process emissions to produce
a lower-carbon form of energy than coal, and
equivalent new recycled carbon materials.
Making carbon-neutral steel: the Smart Carbon route
Recycled
Bio-ethanol
carbon materials
Chemical industry
Green hydrogen
Clean electricity (post 2030)
Input of clean energy in the
form of hydrogen from clean
End of life
Sustainable
Carbalyst
electricity via electrolysis of
recycling
biomass
water into steelmaking
Use of circular carbon
to produce feedstock for
biomaterials production
Circular carbon (now)
Torero
Bioenergy
Input of clean energy in the
Clean electricity
Electrolysis
form of bioenergy from circular
generation
carbon from end of life plastics
and from sustainable biomass
Carbon capture and storage
Carbon capture and storage
IGAR
Blue hydrogen
Capturing,
Input of clean energy in the
transporting and
BF-BOF
form of hydrogen via separation
storing any non-circular
Carbon transport
Reformer
and carbon capture and storage
carbon sources
Carbon transport
Carbon storage
Carbon storage
of carbon in natural gas
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The Smart Carbon route: technologies under construction
Fully implemented, the Smart Carbon route results in:
One tonne of carbon-neutral steel
Carbalyst® (Steelanol): At ArcelorMittal Ghent
3D (DMX™ Demonstration in Dunkirk):
in Belgium, we are building an industrial-scale
Construction of a carbon capture pilot project,
250kg carbon-
The high temperature control ed reduction environment of iron making
demonstration plant to capture carbon off-
3D, is underway at ArcelorMittal Dunkirk in France.
neutral cement
produces 250kg carbon-neutral slag, a direct substitute for cement.
gases from the blast furnace and convert it
The technology will al ow us to capture 0.5 metric
Production of slag through this route in Europe covers approximately
into 80 mil ion litres of bio-ethanol a year.
tonnes of CO2 an hour from off-gases, by 2021.
10-15% of demand for cement, meaning 10-15 mil ion tonnes of
This €165 mil ion project is expected to be
ArcelorMittal is involved in the Northern Lights and
CO2 emissions from cement are avoided.
completed in 2022.
Porthos carbon transport and storage projects.
200kg carbon-
In Europe, polyethylene-based plastics account for more than half of the
neutral biomaterials
64 mil ion tonnes of plastics and fibres produced. If the entire European
steel industry switched to Smart Carbon, we could supply more than
60% of Europe’s polyethylene-based plastic needs, equivalent to 30%
of the entire demand for plastic and fibre.
IGAR (Injection de Gaz Réformé):
Torero: At ArcelorMittal Ghent in Belgium,
At ArcelorMittal Dunkirk in France, we are
we are building a €50 million large-scale
Carbon removal
Increased use of circular carbon, using sustainable biomass and waste
building an industrial-scale pilot to capture waste
demonstration plant, to convert waste wood into
potential
combined with scaling up CCS not only makes steelmaking carbon neutral,
CO2 and waste hydrogen from the steelmaking
bio-coal, replacing the coal currently injected as
but can turn the industry into a net contributor to removing CO2 from
process and internal y convert it into synthetic
a reductant in iron and steelmaking. The plant is
the atmosphere.
gas. The synthetic gas will replace the use of
expected to be operational by the end of 2022.
fossil fuels in ironmaking.
Making steel using the Smart Carbon route: what will it cost, compared with today?
+30% using mostly circular
using mostly
carbon and CCS
+60% green hydrogen
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The DRI route (Hydrogen DRI post-2030)
Reaching carbon-neutral steelmaking via the
We believe with the right funding support we could To ramp up, we could use blue hydrogen: sourced by
DRI involves moving from using predominantly
have one of the first Hydrogen DRI demonstration
extracting hydrogen from natural gas and capturing
Using the natural gas DRI-EAF production route
natural gas to hydrogen as the key reductant.
plant operating in Europe by mid-2020s.
and storing the CO
initial y, we foresee a longer-term transition
2 generated in the process.
As this hydrogen becomes ‘green’ – made using
to carbon-neutral Hydrogen DRI-EAF steel
The plant’s major technological chal enge for this
In the longer term, we could use green hydrogen:
clean electricity – we will bring the entire
production. This will be dependent on when the
route is bringing hydrogen-based DRI production
sourced by extracting hydrogen from water
steelmaking process close to carbon neutrality.
technology matures, and when enough cost-
to commercial maturity and so industrial scale
through electrolysis, by using clean power and
effective hydrogen is available. ArcelorMittal is
To achieve full carbon neutrality, however,
production is unlikely to be significant before
heat. Unlike the Smart Carbon route, the Hydrogen
in a unique position to leverage its European and
we wil still need to incorporate some circular
the 2030s.
DRI route doesn’t create any other carbon-neutral
global DRI-based steel production footprint.
carbon into the process by using sustainable
products such as cement and bio-materials.
biomass to produce bioenergy.
Making carbon-neutral steel: the DRI-based route
Clean electricity (post 2030)
Green hydrogen
Pyrolysis
Input of clean energy in the form of
hydrogen from clean electricity via
electrolysis of water into steelmaking
Bioenergy
Sustainable
biomass
Circular carbon
Input of clean energy in
the form of bioenergy
Clean electricity
Electrolysis
from circular carbon
generation
from sustainable
Circular
biomass
carbon
dioxide
Carbon capture and storage
Carbon capture and storage
Blue hydrogen
Capturing,
Input of clean energy in the
DRI – EAF
transporting and
Carbon transport
Reformer
form of hydrogen via separation
storing any non-circular
Carbon transport
Carbon storage
and carbon capture and storage
carbon sources
Carbon storage
of carbon in natural gas
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The Hydrogen DRI route
Making steel using the DRI route: what will it cost, compared with today?
using mostly blue
using mostly
hydrogen and CCS
green hydrogen
ArcelorMittal Hamburg’s hydrogen project:
+50%
+80%
We are in the design and funding phase of an industrial-scale project to use hydrogen instead
of natural gas in the direct reduction of iron ore (DRI). The objective is to reach industrial commercial
maturity of the technology by the mid-2020s, initial y producing 100,000 tonnes of sponge iron a year.
Increased use of scrap
Steel scrap from end-of-life products can be
We are using digitalisation and mathematical
recycled back into new steel products with
optimisation algorithms to optimise our
a potential y very low CO2 footprint, once the
procurement of scrap, making sure the right
power source is decarbonised. Given the limits
quantities and qualities of scrap are reaching our
on availability, however, today’s chal enge is
different sites to achieve the most efficient and
As the Smart Carbon diagram shows (see page 4),
Longer term, the evolution of the cost of hydrogen
to use all forms of scrap in the most efficient
cost-effective use of scrap.
we will leverage three clean energies in order to
for steelmakers, and the sustained availability
way. For example, using scrap local y to avoid
ArcelorMittal also intends to invest in new and
produce carbon-neutral steel.
of bioenergy and CCS, will be key factors in
emissions from transportation. As scrap
innovative technologies to be able to melt more
determining the level of adoption of hydrogen in
availability increases in the regions where we
Today, the costs associated with these three
and lower quality scrap in our primary steel
steelmaking. We estimate green hydrogen costs
operate, we will increase our use of local scrap
energies differ and over time, the cost of supplying
production facilities in Europe.
would have to decrease by at least 50% to become
as part of our overall strategy both to reduce
clean energy will reduce as the technologies
competitive with other clean energy sources, and
emissions and to enhance the use of scrap in
mature and the infrastructure expands.
more than 75% compared with current fuels.
the circular economy.
But with the urgent need to reduce CO2 emissions
By 2050, our analysis concludes that the additional
significantly in order to ensure global warming is
cost of using green hydrogen will converge with
What will our roadmap to 2050 cost?
kept to a maximum of 1.5ºC, we intend to use the
CCS and circular carbon, meaning that we wil
clean energy source that is the most cost effective,
Investment
Production cost
then adjust the blend of clean energies that
and deployable, in order to make progress in
needed
increase
we use to achieve carbon-neutral steel.
reaching our 30% CO
ArcelorMittal Europe
Clean energy
2 emissions reduction target
by 2030.
steel footprint
infrastructure
We believe Smart Carbon technologies are
Smart Carbon
€15-25 billion
€15-165 billion1
+30-60%1
”Wecouldhavethefirst
sufficiently mature in the short term to make
DRI route
€30-40 billion
€40-200 bil ion2
+50-80%2
a significant contribution to our 2030 emissions
Hydrogen DRI demonstration
reduction target. These technologies wil leverage
1 Lower end of range leveraging bioenergy and CCS infrastructure; high end of range leveraging green
primarily bioenergy and CCS, which are clean
plant operating in Europe by
hydrogen infrastructure.
energy sources with a lower cost compared with
2 Lower end of range leveraging CCS and blue hydrogen infrastructure; high end of range leveraging green
the mid-2020s.”
today’s high-cost hydrogen.
hydrogen infrastructure.
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The right framework
We are leading the innovation in the key
But with the right market conditions, we create
Carbon neutral by 2050: the pieces we bring
technologies to be ready for roll-out across
strong foundations to transition the steel industry
Europe. We have committed more than
to carbon neutrality. The medium-term market
€250 million in innovation to date and with
conditions needed include:
continued public funding support, some of
1. Creating an environment where carbon-neutral
these technologies could reach commercial
R&D
DRI-based
Increased
steel is more competitive than steel which is
maturity before 2025. We believe that by
capabilities
technologies
scrap use
not carbon neutral
2030 we can have many of the Smart Carbon
technologies mature and partially deployed
2. A fair competitive landscape that accounts
across our facilities in Europe. This will form
for the global nature of the steel market,
a big part of the picture.
addressing domestic, import and export steel
dynamics, as well as the distinction between
However, the steel industry is a low margin
primary and secondary sources to make steel.
business, requiring long-term capex investment,
Activity aligned
Smart
Carbon Border
and operating in a highly-competitive market.
3. Financial muscle to innovate and make
with Paris
Carbon
Adjustment
Today, the biggest barrier to transitioning to
long-term investments.
Agreement
technologies
carbon-neutral steel, beyond the necessary
4. Access to clean energies – the scale of the
technologies reaching commercial maturity, is the
steel industry’s energy needs are such that
absence of the right market conditions.
concerted cross-sector and government
We estimate that carbon-neutral steel will result in
efforts will be required to develop the
30-80% higher cost versus today’s CO2 intensive
necessary clean energy infrastructure.
steel. Additional y, not all steel and steel intensive
Abundant,
5.
Public instruments to accelerate innovative
affordable
Sustainable
Circular
goods are subject to the same carbon costs,
technology deployment to transition to
clean energy
finance
economy
creating uneven incentives for carbon neutrality
carbon-neutral steelmaking.
between market participants, including between
domestic production and imports, and between
In the long term, we believe the most effective
steel produced from primary and secondary
system for society will be creating a materials-wide
sources. Without a shift in market conditions,
system that accounts not only for CO2 emissions,
we will not be able to unlock the means to
but also accounts for the full circularity of
reduce emissions from steel global y, while the
materials. This will create healthy competition
European steel industry increasingly risks
between materials (e.g. steel, cement, aluminium)
becoming uncompetitive.
in overlapping applications, accelerating the advent
of a carbon-neutral and circular economy.
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The missing pieces
However, we cannot do it alone and there are
pieces of the puzzle missing.
• A Carbon Border Adjustment (CBA): is a key
• Access to sustainable finance for
policy mechanism needed to decarbonise,
low-emissions steelmaking: Some of our
equalise the market and create a fair competitive
current R&D projects are funded by EU Horizon
landscape, by aligning the carbon costs of EU
2020. Accelerating and rol ing out low-emissions
Sus
domestic steel producers with that of imports.
steelmaking will need further public funding
tain
fi
a
n
b
a
le
EU domestic steel producers are increasingly
through, for example, the EU ETS Innovation
nce
exposed to carbon costs through the EU’s
Fund or the European Union’s Important
Carbon Border
Emissions Trading System (ETS), while imports
Adjustment
Projects of Common European Interest (IPCEI).
are exempt yet continue to be responsible for
The EU Sustainable Finance legislation should
a significant part of CO2 emissions of steel used
enable these investments to make a positive
in Europe.
contribution to the low-carbon circular
economy, with realistic criteria.
• Access to abundant and affordable clean
energy: This is currently not available nor
• Accelerate transition to a circular economy:
economical y viable in Europe. Improvements
EU climate and materials policy should be
are therefore needed in the EU state aid rules
integrated, taking a lifecycle perspective to
for energy and environment to enable the
ensure that materials are used in a circular
rol -out of low-emissions steelmaking.
way as much as possible.
Abu
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,
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nergy
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Carbon Border Adjustment
• To be effective, free alocation of ETS
al owances, which are gradual y being phased
ArcelorMittal supports the introduction of
out by the European Commission, should be
a Carbon Border Adjustment (CBA) as proposed
maintained in the first stage of the CBA,
in the EU Green Deal. This would mean that
alongside compensation for high energy costs
when steel comes into the EU, the carbon costs
as an indirect result of the ETS. This is crucial to
that European producers pay would be added
enabling European steel to stay competitive and
to the imported steel. This would ensure that
ensure a smooth transition without disruption.
EU-produced steel and imported steel tonnes
A CBA based on ful auctioning of ETS al owances
that are in direct competition would have an
from the start, would mean that the EU steel
equal carbon cost, creating a fair market and,
industry has to be sure it can pass through al
crucially, encouraging investment in lower-
its decarbonisation costs, including ful auction
emissions steel production.
costs. This is not currently possible, as importers
A CBA can be applied in various ways, as long
set the price and can absorb levies at the border:
as it neutralises the disparities in carbon costs
their import volumes only represent a smal
between domestic products and imports, and
portion of their portfolio. This would be
incentivises the transition to low-carbon steel
counterproductive and is why there needs to be
production. Crucial y, the CBA can be designed
a transition period to al ow the decarbonisation
in a WTO-compatible way, depending on how
of the EU industry.
the environmental objective is set. This is how
it could work best:
• To mirror this, European producers exporting
to countries without carbon costs could apply
• Producers exporting to the EU should be
for a rebate so that they are able to compete
charged the same marginal carbon emission cost as
on a fair footing with other market participants.
European producers pay under the ETS. This should
Ultimately, the CBA would encourage Europe’s
The Energy Transitions Commission estimates
serve as a catalyst to other countries to introduce
• The CBA levy should be a default one by sector,
trading partners and companies to adopt
that the total annual investment requirements to
but can be reduced or removed if there is an
their own carbon reduction schemes and invest in
equivalent policies, in effect expanding the
decarbonise the steel industry global y are around
“Agreement of Equivalence” with a third country
technologies to decarbonise. Introducing a CBA
umbrel a of CBA beyond the EU, moving
$80 bil ion per year. A well designed and fair CBA
regarding their decarbonisation policy for that
based not on marginal carbon costs, but average
towards a truly global net-zero drive for steel.
and public and private financing to roll out the
sector. Only with this system can the EU exercise
carbon costs spread over all EU steel production,
technology, would be a big step closer to making
its climate diplomacy and show leadership
We believe a poorly designed CBA that dilutes
would not align EU domestic producers’ true
this happen.
global y. Such leadership cannot be reached by
carbon costs for imports and includes a drastic
carbon costs with imports. Not only would this
basing a CBA on site-specific emissions for
reduction in free ETS al owances without
We know we need to invest more to decarbonise
continue to erode EU producers’ competitiveness
producers outside the EU. In practice, it would
a transitional period, would be ineffective as
our industry, but a CBA will ensure we all contribute
and threaten their future, it would mean the CBA
also be too difficult and could lead to gaming by
it would fail to create the necessary carbon
equal y to a low-carbon world. It means that the
had failed in its objective of climate protection.
non-EU producers, who could send the steel made conditions to transition to net-zero steel.
price of steel will go up, adding a maximum of 1%
• The CBA should initialy be applied to primary
with a low-carbon footprint to the EU and steel
It could even increase the detrimental effects
to the cost of a car for example. However, crucial y,
goods, rather than end products like household
made with a higher carbon footprint to other
on EU domestic industry’s viability, due to
the proceeds will be invested in large-scale green
appliances and everyday tools. This is the most
markets; this would not help their decarbonisation, significant increased CO2 costs without providing
technologies that lead to a new era of lower carbon
practical way to introduce the CBA.
or help to lower worldwide CO2 emissions.
an effective increase in price to offset these costs. emissions and a cleaner, greener steel industry.
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Long term – valuing goods and products
We believe such policy would better valorise the
for their carbon and circularity footprint
emissions and circularity advantages of steel over
other material groups in overlapping applications.
To meet the targets in the Paris Agreement
Transparency of the real carbon and circularity
and prevent the average global temperature
footprint of a product, from production to
rising by more than 1.5 degrees Celsius,
end-of-life, will create healthy competition
a long-term, fundamental shift in the way we
between materials (e.g. steel, cement, aluminium),
consume goods and products will be required.
accelerating the advent of a carbon-neutral and
Long term, we believe policies should converge
circular economy. We welcome the European
towards regulation that both minimises the carbon Commission’s commitment to building a circular
footprint of goods and products and maximises
economy for Europe, as one of the foundations
their circularity.
of the Green Deal.
Such a policy framework would provide the
We recognise that developing such a framework
necessary incentives to accelerate consumer
is some way off, so the current focus should be to
behaviour change, encouraging a switch
complement existing policies to create an effective
to materials, products and energy sources
CO2 policy framework by incorporating a CBA.
with a lower carbon footprint and better
This can effectively kick start the decarbonisation
circularity credentials.
of the steel industry through to 2030.
Any revenues generated from such a policy
As we have said in this report and in the Global
framework could in turn be invested in carbon-
Climate Action Report published in May 2019,
neutral and circular innovation projects, further
we know we have a role to play, recognising that
accelerating the transition to a carbon-neutral
we are all responsible for stopping climate change.
circular economy.
Now we need to go beyond recognising the
problem, to col ectively make a difference.
” We welcome the European Commission’s commitment
to building a circular economy for Europe, as one of the
foundations of the Green Deal.”
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Appendix
Additional data
Sustainability at ArcelorMittal
Sustainable development is at the heart of our purpose: inventing smarter steels for a better
ArcelorMittal Europe CO2 intensity – 2018 baseline for 2030 target
world. This means preparing for and responding to the most significant long-term environmental
and social trends that are transforming the context in which we operate. And so we listen careful y
In 2018, ArcelorMittal Europe’s carbon intensity was 1.6 tonnes of CO2 per tonne of crude steel.
to stakeholders, both local y and global y, and recognise a trend of rising expectations.
ArcelorMittal Europe includes ArcelorMittal Europe – Flat Products, ArcelorMittal Europe –
Long Products, and Industeel.
Our target to reduce our European Scope 1 CO2 intensity by 30% by 2030, over a 2018 baseline,
does not include Ilva, as the baseline is set from 1 January 2018; Ilva joined the ArcelorMittal
group on 1 November 2018. However the decarbonisation of Ilva is central to our business plan
and details of this will be published in due course.
Basis of Reporting
DISCLOSURE INSIGHT ACTION
We differentiate as fol ows:
Operational boundary: we report on our CO2
emissions using the control approach of the
‘Direct emissions’ are the actual emissions
GHG Protocol.
ArcelorMittal has been recognised by CDP for
The ResponsibleSteel™ site standard was
coming out of the chimneys of the sites. This
its leadership on corporate transparency and
publicly launched in December 2019, the
data is based on a carbon balance at site level.
For more information, visit
corporate-media.
action on climate change. In January 2020,
first multi-stakeholder environmental, social
arcelormittal.com/media/bjidbiwc/arcelor-
‘Process emissions’ are the aggregate of
ArcelorMittal reached CDP climate leadership level
and governance (ESG) standard for the steel
mittal-basis-of-reporting-2019.pdf
direct emissions + emissions resulting from the
with an ‘A-‘ grade for the first time, fol owing its
industry. ArcelorMittal has played a leading
combustion of exported waste gas used in the
comprehensive response to the CDP Climate
role in developing ResponsibleSteel and has
power plant to generate electricity.
Change survey, which is now aligned with the
committed to certifying 100% of ArcelorMittal
TCFD (Task Force on Climate related Financial
Europe – Flat Products sites by the end of 2020.
Disclosures) recommendations.
Further reading
ArcelorMittal was ranked first in five
categories relating to steel companies’ readiness
Mission Possible: Reaching net-zero emissions
for a low-carbon transition, in the July 2019
in harder-to-abate sectors by mid-century
CDP report ‘Melting Point’.
www.energy-transitions.org/mission-possible
Energy Transitions Commission, November 2018
Energy Transitions Indicators:
www.iea.org/articles/energy-transitions-indicators
IEA, December 2019
Designed and produced by Falcon Windsor
www.falconwindsor.com
For more information
corporate.arcelormittal.com/sustainability/climate-action-in-europe
Published in May 2020
ArcelorMittal
24-26, Boulevard d’Avranches
L-1160 Luxembourg
Grand Duchy of Luxembourg
corporate.arcelormittal.com
