• Carbon border tax and Europeans’ willingness to pay vital to EU steelmakers’ push towards decarbonisation

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      Patrick Lavery

      Combustion Industry News Editor

An opinion piece in the Financial Times has looked at the market problems facing European steelmakers as they work towards decarbonising their industry. The piece estimates that low carbon steel would today add something like US$200 (€170) on to the price of a typical car, provided that all costs were passed onto the consumer, and points out that analogous attempts to include the cost of environmental or social externalities in the price of products (such as Fair Trade coffee or Forest Stewardship Council certified wood products) have resulted in relatively small market shares. This problem would in theory be solved by a two-pronged EU-wide approach of requiring all steel produced in the EU bloc to be low or zero carbon, and to impose the carbon border tax that is currently being designed, such that imports of steel must also carry the cost of carbon. However, the piece points out that the border tax will need to be very well designed and implemented to be effective, and that the EU Emissions Trading System has so far had the effect of reducing the profits of European steelmakers, such that they do not have the capital to invest in low or zero-carbon production modifications (which has led many to ask for governmental assistance to decarbonise). Even if these measures are effective in creating a zero-carbon playing field, consumers in Europe will end up paying the price through higher costs, and the European Commission will need to persuade Europeans of the value of doing so. Though the opinion piece makes some good points, and there is a possibility that European steelmakers will suffer through the decarbonisation push, there are counter examples against it – stricter regulations on SOx, NOx, heavy metals and other pollutants have all meant higher costs for consumers, but relatively few would now look back and wish they were not imposed. In addition, such tightening regulations also produced innovation within the industry, something that is sure to occur with the decarbonisation of steel, too.