Europe’s proposed carbon border adjustment could hold the key to breakthrough on CO2 emissions reduction

 

12 March 2020

ArcelorMittal today calls for member states and MEPs to support the introduction of a carbon border adjustment (CBA), as part of the European Commission’s €1 trillion Green Deal, aimed at making the bloc carbon neutral by 2050.

In a manifesto published today, ‘Creating a low carbon world, the case for a Carbon Border Adjustment’, ArcelorMittal sets out its firm belief that a CBA should be one of the first Green Deal measures adopted by the new European Commission, as it will help to create the market conditions and protections needed for companies to make investments and transition to carbon neutrality without disruption.

Currently within the EU, energy-intensive industries including steel producers, pay a carbon cost under the EU Emissions Trading System (ETS). But this does not apply to steel producers from markets outside the EU who can sell steel with comparable or often significantly higher, carbon emissions, at a lower price. The result is that steel production is moving to non-EU countries where carbon emissions legislation is often less strict, undermining efforts to combat climate change. 

However, with a CBA, when steel comes into the EU, the carbon costs that European producers pay would be added to the imported steel, equalising the cost of carbon for every producer to create a fair market and, crucially, encouraging investment in lower-emissions steel production.

Geert Van Poelvoorde, CEO ArcelorMittal Europe – Flat Products says: “The EU’s commitment to reduce its carbon emissions to net-zero should be applauded and we hope that decision makers across Europe will back the proposals as they really could hold the key to unlocking solutions that could put a stop to carbon emissions. The climate challenge is unprecedented, and bold action is needed.”

ArcelorMittal believes that a CBA can be applied in various ways, as long as it neutralizes the disparities in carbon costs between domestic products and imports, and incentivizes the transition to low carbon steel production. In the manifesto, ArcelorMittal highlights how the best-designed carbon border adjustment could work effectively:

Producers exporting to the EU should be charged the same marginal carbon emissions cost as European producers pay under the ETS. This should serve as a catalyst to other countries to introduce their own carbon schemes and invest in technologies to decarbonise.

The CBA should initially be applied to primary goods, rather than end products like household appliances and everyday tools. This is the most practical way to introduce the CBA.

To be effective, free allocation of ETS allowances, which are gradually being phased out by the European Commission, should be maintained in the first stage of the CBA, alongside compensation for high energy costs as an indirect result of the ETS. This is crucial to enabling European steel to stay competitive and ensure a smooth transition without disruption.

He says: “There are of course challenges that will need to be overcome. For example, some have argued that there is the risk of contravening international trade rules. However, the establishment of a border adjustment is compatible with international trade rules, allowing members to adopt measures necessary for the protection of the environment or relating to the conservation of natural resources providing that such measures do not constitute arbitrary discrimination between countries where the same conditions prevail. But this will only work if the policies are well-designed and drafted in the right way.” 

He also says: “We know we need to invest more to decarbonise our industry and we truly believe we can be a world leader in low carbon steel. But in order to do so, we need to have a CBA to create a landscape where others also contribute equally to a carbon-neutral world. The time to do this is now, with the proceeds allowing further investment in large-scale green technologies that lead to a new era of low carbon emissions.” 

For more information, to read the manifesto and view our short animation on the CBA, see here:

https://corporate.arcelormittal.com/sustainability/climate-action-in-europe

ENDS

About ArcelorMittal ArcelorMittal is the world's leading steel and mining company, with a presence in 60 countries and primary steelmaking facilities in 18 countries. In 2019, ArcelorMittal had revenues of $70.6 billion and crude steel production of 89.8 million metric tonnes, while iron ore production reached 57.1 million metric tonnes. Our goal is to help build a better world with smarter steels. Steels made using innovative processes which use less energy, emit significantly less carbon and reduce costs. Steels that are cleaner, stronger and reusable. Steels for electric vehicles and renewable energy infrastructure that will support societies as they transform through this century. With steel at our core, our inventive people and an entrepreneurial culture at heart, we will support the world in making that change. This is what we believe it takes to be the steel company of the future. ArcelorMittal is listed on the stock exchanges of New York (MT), Amsterdam (MT), Paris (MT), Luxembourg (MT) and on the Spanish stock exchanges of Barcelona, Bilbao, Madrid and Valencia (MTS). For more information about ArcelorMittal please visit: http://corporate.arcelormittal.com/

 Contact information – ArcelorMittal Europe communications Surinder.Sian@arcelormittal.com +44 203 214 2876 Sophie.Evans@arcelormittal.com +44 203 214 2882 
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