ArcelorMittal call for green border adjustment to address climate change
ArcelorMittal has called for Europe to introduce a green border adjustment whereby steel imported into Europe has the same standards applied on CO2 as European-produced steel under the Emissions Trading System regime.
The adjustment would call for any shortfall in CO2 emissions to be compensated by the importer. The green border adjustment would incentivise effective reduction in carbon emissions and prevent the competitiveness of the European steel industry being eroded.
Following the implementation of phase 4 of the ETS European steel producers will incur additional costs that companies producing in other regions of the world and importing into Europe are not obliged to pay.
Steel is a globally traded material with approximately one third consumed in a different country to where it was produced. Imports into Europe have increased in recent years as a result of global overcapacity with imports from countries without comparable climate policies in 2018 standing at approximately 26 million tonnes on an annualised basis.
Speaking at the company's annual media day, held in Paris, Aditya Mittal, President and CFO of ArcelorMittal, said: “The introduction of a green border adjustment is critical to creating a level playing field from which to drive genuine improvement. The current system will not change how steel is made only where steel is made. Europe will continue to need as much steel as ever, but the likelihood is more of this steel will come from countries that do not have comparable climate policies. That may enable Europe to claim the emissions of its production has reduced but that is meaningless when it doesn’t address the emissions of what it consumes. There are no continents in the sky and while the contributions of individual countries are important, there must be measures to prevent carbon leakage in globally traded materials like steel. I am convinced that we can help make a real and positive difference, but only if we have the right policies in place to support a level playing field and incentivise and support investments in potentially transformation technologies. I sincerely hope that Europe’s policymakers can see the logic and rationale for this and will give it serious consideration.”
During the media day, ArcelorMittal also said it is analysing the application of new technologies that can have a significant impact over the longer-term, including carbon capture, storage and use; using renewable carbon such as renewable biomass; and replacing carbon with renewable sources of power. However, it also cautioned that investment from both public and private sources for the demonstration, scale-up and commercialisation of these breakthrough technologies will be required, as was the case in the European energy sector which on average has received government support equivalent to an annual subsidy of over EUR50/t of CO2 emissions avoided.
David Clarke, Vice President Strategy and CTO said: “Steel is the world’s preferred material, nature-friendly, supportive of a circular economy and at the heart of the sustainable future. Steel is superior to other materials in both its recyclability and intensity of CO2 emissions. Policy, energy and technology developments will be the key determinants of successful lower emissions pathways for steelmaking. Provided there is significant support for resourcing the technical challenge, we believe the steel industry can adapt its technology over the next decades to meet the carbon challenge. To enable this, however, it is critical that governments put in place policy that is sound, and this includes a level playing field and access to competitively priced, renewable energy.”
ArcelorMittal highlighted steel’s natural advantage over other materials from the perspective of both recyclability and CO2. Steel’s magnetic properties make it the easiest material to recover from waste streams, and it is 100% recyclable to produce a new piece of steel. And even as it currently stands a product made from steel will have generated significantly less CO2 than one made from other materials, including glass or aluminium.