This and past centuries witnessed an exploitation of resources with scant attention to the environmental cost of economic activities. Society, industry, politics have learnt the lessons well.
Fortunately we have all changed. Now, society has identified the need to tackle climate change. We all share that ambition. However, society also needs an economy, jobs, houses, and infrastructure. So clearly, there is no such thing as a free lunch. We must all pay something.
The steel industry is making its contribution. In the past 40 years the European steel industry has reduced energy consumption by 50 per cent without reducing production. CO2 emissions have been reduced by more than 50 per cent since 1970, 25 per cent since 1990 alone.
The European steel industry is the world-leader in research and development into low-carbon technologies. The ultra-low carbon steelmaking (ULCOS) programme is unique in the world and unites steel companies which are usually in fierce competition with each other. In the EU new steel products featuring reduced weight, high ductility and ultra-high strength contribute to real energy and CO2 savings.
"The use of steel both in industrial applications and in consumer products saves six times the CO2 which is emitted when the steel used for these applications is itself produced"
The use of steel both in industrial applications and in consumer products saves six times the CO2 which is emitted when the steel used for these applications is itself produced. Steel is therefore a CO2 mitigation enabler. Europe will not arrive at its targets for CO2 reduction without it. Studies show that by 2030 the EU could save over 450 million tonnes of CO2 per year with innovative steel applications– with steel made in Europe.
The EU steel industry's energy intensity has been substantially lower than that in other regions and has improved by almost 19 percent between 2001 and 2011 while for example in the US the improvement over the same period was only nine percent. So, European industry is the benchmark in energy efficiency and sustainability, thanks to skilled engineers, workers, thanks to politicians who support an innovation culture in Europe.
With programmes such as Horizon 2020 and Spire the EU has made a huge effort to provide financial instruments for research and development on an EU level. It is now important to implement these instruments efficiently, for example with risk financing for industrial large scale demonstration projects of new energy efficient technologies.
On the other hand the European steel industry has come to the point where no further reduction in greenhouse gas emissions can be achieved with current technologies. Like most energy intensive sectors, the steel industry has developed its own low-carbon industrial roadmap to examine what more it can do.
As it demonstrates the technologies available now are both technically unfeasible and uneconomic, our common efforts to identify and develop innovative low-carbon steel making technologies must continue but this is vastly expensive and will take many years. The efforts we are making are far more extensive than anything being done in other steelmaking regions or by most other industrial sectors.
In the meantime therefore the industry in Europe needs policy measures that protect and nurture the steel industry as one of the important foundation industries of Europe.
"In the meantime therefore the industry in Europe needs policy measures that protect and nurture the steel industry as one of the important foundation industries of Europe"
Balanced industrial policies are key for global competitiveness, together with competitive energy costs. EU unilateral policy measures which increase the energy price gap with global competitors must be corrected and the multiple layers of regulation and additional burdens on industry must be eliminated. The European emissions trading scheme in fact demonstrates how exposed the European steel industry is to fierce competition from third countries.
The EU steel sector is not able to pass on direct and indirect CO2 costs to customers. Therefore, CO2 costs impact operating margins and thus, financial means available for investment. We have calculated the potential impact of the EU emission trading scheme on our sector if the proposed market stability reserve and an increased reduction factor of 2.2 per cent per year would be applied: costs of up to €100bn between 2020 and 2030 at a carbon price of €40. These costs would have a devastating effect on our industry.
It would not only hamper innovation, it would damage employment and cause a drain of expertise to everywhere outside Europe.
We don't ask for a free lunch. Even if we were to get 100 per cent free allowances for our best performers based on a decent benchmark (which is not the case at present) the cost to us of European climate policy will still be €30-50bn over the next 10 years, but we’re prepared to pay so that the next generation doesn’t have to.