Three leading European steel producers – ArcelorMittal Europe, thyssenkrupp Steel and voestalpine – have issued a joint appeal for an urgent and pragmatic reform of the EU Emissions Trading System (EU-ETS). The companies warn that, without adjustments, the current course threatens to destroy Europe's industrial base. In an article published in the Financial Times, Lakshmi Mittal, Executive Chairman of ArcelorMittal, sets out the joint position and outlines how the EU-ETS must be reformed to protect the European steel industry and the sectors it supplies.
Together, the three companies account for around 60 % of Europe's integrated steel production and stand at the centre of EU industrial value chains. All three are committed to decarbonising their production but stress that the political framework must enable the transformation rather than hinder it.
Rising ETS costs without viable framework conditions
ArcelorMittal, thyssenkrupp Steel and voestalpine note that while the ETS has delivered emissions reductions in the energy sector – by around 49 % between 2005 and 2023 – it does not yet offer a viable pathway for energy-intensive industries such as steel. Key preconditions for economically viable decarbonisation remain insufficiently developed or unavailable at scale. These include competitive electricity prices, affordable green hydrogen, Carbon Contracts for Difference, carbon capture and storage, and lead markets for low-emission steel.
Under the current EU-ETS framework, the cost of steel production in the EU is expected to rise by around 50 % by the early 2030s. Because steel-intensive imports are not subject to equivalent CO₂ costs and EU steel exports receive no reimbursement to cover CO₂ costs, the sharp increase in ETS costs will have far-reaching consequences for European steel production and the entire value chain.
A threat to the backbone of European manufacturing
The three companies estimate that, without EU-ETS reforms, the EU could see a 30–40 % decline in steel-intensive production activity, putting up to 5 million jobs along the entire value chain at risk. Such an outcome would run counter to the EU's goal, set out in the "Industrial Accelerator Act", of raising manufacturing's share of GDP to 20 %, and would considerably weaken Europe's economic resilience at a time of intensifying global competition.
Call for a cost pause and a balanced framework
The companies emphasise that they fully support Europe's climate goals and are pursuing decarbonisation. However, the ETS must be adapted to the realities of industrial transformation. They jointly call for:
- A temporary suspension of cost increases under the ETS, maintaining the current level until the essential preconditions for economically viable decarbonisation are in place.
- A framework ensuring that first movers are supported so that early decarbonisation projects can continue to advance. ETS revenues should be reinvested in industrial decarbonisation to accelerate the transition.
- A balanced approach to competitiveness on both the import and export side, addressing the unintended consequences of the current system.
The recent introduction of the Carbon Border Adjustment Mechanism (CBAM) and the upcoming tariff quotas are seen as important steps toward fairer competitive conditions. However, the reform of the EU-ETS is described as the final piece of the puzzle needed to ensure that Europe can both decarbonise and maintain a strong industrial base.
Voices from the companies
Marie Jaroni, CEO of thyssenkrupp Steel, said: "The ETS needs a reality check. It does not reflect Europe's industrial present, in which competitiveness and transformation are increasingly at odds. That is why we need a cost pause in the ETS to safeguard the transformation and avoid disadvantaging first movers like us. The reform must help bring climate protection and industrial development successfully together for Europe's future."
Herbert Eibensteiner, CEO of voestalpine AG, said: "voestalpine is making significant investments under its greentec steel programme and will substantially reduce its emissions in the coming years. In a challenging economic environment, however, the gradual phase-out of free allocation is already tying up financial resources needed for the critical phase of the transformation. A suspension within the ETS framework, until the necessary conditions are in place, is decisive in securing these investments and enabling further decarbonisation steps."
Lakshmi Mittal, Executive Chairman of ArcelorMittal, said: "A future must be found for the ETS that creates incentives for decarbonisation without undermining competitiveness. This is not an easy problem to solve, but reform of the ETS is essential, and we welcome the fact that Europe's policymakers have put the issue back on the agenda. The choice they face is not between climate goals and competitiveness. The choice is between a climate strategy that strengthens Europe's resilience and economic security and one that undermines them."
