BRUSSELS \u2013 Steelmaker SSAB is spending \u20ac6 billion ($6.8 billion) to upgrade its operations, switching from coal to low-carbon hydrogen in a bet that European Union policies would reward lower-emission production and help it outcompete more polluting rivals.<\/p>\n
But the Swedish company is among a group of industrial companies concerned that an EU proposal to overhaul the emissions trading system, Europe\u2019s main policy for reducing the CO2 emissions heating the planet, will weaken the scheme, eroding the advantage for low-carbon early movers. \u201cCompanies that have not invested might actually get an advantage,\u201d said Helena \u200bNorrman, executive vice president of communications at SSAB.<\/p>\n
The debate exposes a core dilemma in Europe\u2019s climate strategy: whether policymakers will hold the line on carbon pricing, or will \u200cthey yield \u200cto political pressure and help heavy polluters struggling with high energy bills and global competition.<\/p>\n
The ETS is the EU\u2019s flagship climate \u200bchange policy. Since 2005, it has required heavy industries and power plants to buy CO2 permits when they emit, creating a financial incentive to invest in less-emitting technologies.<\/p>\n
The long-planned changes to the ETS, aimed at aligning the system with the EU\u2019s 2040 climate goal agreed last year, are taking place during a political backlash against Europe\u2019s green agenda, which \u2060some leaders, including Italy\u2019s Giorgia Meloni and Poland\u2019s Donald Tusk, argue is eroding industrial competitiveness. \u201cHow do you make this system compatible with the current competitiveness pressures and security pressures?\u201d said Simone Tagliapietra, senior \u2060fellow at think tank Bruegel, of the challenge facing EU policymakers. Commission officials have signaled willingness to soften the scheme, for example, by giving companies additional free CO2 permits to reduce their carbon bill.<\/p>\n
Carbon prices under the ETS have risen sharply over the past decade, with permits trading \u200bat around \u20ac80 per metric ton currently, up from below \u20ac10 in the \u20602010s, a shift that has helped justify large-scale investments in cleaner technologies.<\/p>\n
At around $100 per ton, low-carbon industrial technologies such as electric heat production begin to compete with conventional methods, Goldman Sachs estimates.<\/p>\n
\u201cIt provides a carbon price signal, which is necessary for us \u2060to make large-scale transformative investments viable,\u201d \u200bsaid Winston Beck, vice president of group public affairs at cement maker Heidelberg Materials, which has invested in lower-carbon raw \u200bmaterials and carbon capture technology.<\/p>\n
Building insulation manufacturer Rockwool has made similar bets, developing electric melting technology to replace fossil fuels in its factories.<\/p>\n
\u201cPeople saw \u200bwhat was coming \u200cfor the ETS,\u201d its head of EU affairs Brook Riley said.<\/p>\n
A weakened ETS could up-end that plan. \u201cIf we invest a hundred million euros per factory in electrifying and suddenly the case for that is undermined … it could yank the carpet from under companies\u2019 feet,\u201d he said.<\/p>\n
BASF, ArcelorMittal and thyssenkrupp have called for \u201cimmediate action to halt the escalation of ETS-related costs,\u201d warning in a June 16 letter to EU leaders, seen by Reuters, that Europe risks acting largely alone in \u200craising carbon prices. BASF, Europe\u2019s largest chemicals producer, used efficiency gains and fuel switching to halve its emissions since 1990, but said options for deeper CO2 cuts such as low-carbon hydrogen and electrification mostly do not make economic sense.<\/p>\n
\u201cWe are entering a much more challenging world now, with the low-hanging fruit pretty much gone,\u201d a BASF spokesperson said. In its current form, the ETS \u201cis not driving us to the next stage of new technologies, they are far too expensive, and the CO2 price is too high to bear for an industry that is facing \u200ba global \u200bcompetition,\u201d the spokesperson added.<\/p>\n
At the heart of the debate is an uncomfortable political reality: The ETS is designed to \u200bcreate winners and losers.<\/p>\n
For investors, the carbon price helps identify which companies are likely to gain a competitive edge, but policy reversals risk blurring that signal.<\/p>\n
\u201cHaving policy flip-flops and reversals \u2060makes that pretty tricky,\u201c\u00a0said Andy Howard, global head of sustainable investment at Schroders. \u201cThere\u2019s a real danger that investors don\u2019t have the ability to confidently allocate our clients\u2019 capital.\u201d<\/p>\n
The ETS covers about 40% of EU emissions, meaning any rollback would have wide economic implications.<\/p>\n
While some low-carbon technologies, such as wind and solar, can compete without high carbon prices, others may struggle to attract funding without a clear incentive to move away from fossil fuels.<\/p>\n
\u201cTo take that away … would be a \u200bvery strong signal to the market that this is not important\u201c, said David Frykman, general partner at venture capital firm Norrsken.<\/p>\n
\u201cIf we can\u2019t see the price development, and we can\u2019t trust it, then any business that is dependent on that becomes much more volatile,\u201c\u00a0he said.<\/p>\n
As pressure mounts on the Commission ahead of its July 15 proposal, SSAB and others warn that dismantling the ETS will not resolve competitiveness challenges rooted in high energy costs, infrastructure gaps and geopolitical uncertainty.<\/p>\n
\u201cIt\u2019s important not to try to fix that with the ETS, because it\u2019s not going to work,\u201c\u00a0said SSAB\u2019s Norrman.<\/p>\n","protected":false},"excerpt":{"rendered":"BRUSSELS \u2013 Steelmaker SSAB is spending \u20ac6 billion ($6.8 billion) to upgrade its operations, switching from coal to…\n","protected":false},"author":2,"featured_media":48809,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[21243],"tags":[6153,4102,1442,721,8104,21276],"class_list":["post-48808","post","type-post","status-publish","format-standard","has-post-thumbnail","category-thyssenkrupp","tag-carbon","tag-emissions","tag-environment","tag-eu","tag-pollution","tag-thyssenkrupp"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/posts\/48808","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/comments?post=48808"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/posts\/48808\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/media\/48809"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/media?parent=48808"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/categories?post=48808"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/tags?post=48808"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}