EUROFER Presents Furious Open Letter to Legislators on Climate Change Policy

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--A head-on confrontation has developed between the European Confederation of Iron and Steel Industries (EUROFER) and European Union legislators over the E.U. Climate Change (EUCC) policy.

The letter is addressed to: The European Council of 24 June 2011; the Environment Council of 21 June 2011; and the European Parliament prior to its vote on the EU climate objective of June 11.

An "Open letter of the EU steel industry to the governments of the EU member states, The European Parliament and the European Commission" addresses the grave concerns of the European steel industry over the EUCC, saying that to remain competitive in the free, global steel markets, European steel needs a level playing field in which legislation does not harm its competitiveness or that of the European economy. But, says the letter, "We are gravely concerned that EUCC policy will do precisely that."

The letter goes on to say that leaders of the European steel industry are extremely disappointed that EUCC policy does not reflect the political agreement when the directive was adopted in December 2008. On the contrary, the E.U. member states and European institutions have disregarded the warnings of the industry on the effects of the E.U. Emissions Trading Directive (ETS).

The steel industry will be severely damaged because of the refusal to provide 100% free allowances for best performers, despite the commitment for this in the ETS directive and the failure so far to allow compensation for ETS-related increases in electricity costs, says the missive signed by members of EUROFER, including the CEOs and top executives of leading companies voestalpine AG (WBAG:VOE) (Linz, Austria), ThyssenKrupp Steel Europe AG (Duisburg, Germany), Salzgitter AG (ETR:SCG) (Salzgitter, Germany), Tata Steel Europe (London, England), Gruppo Riva (Milan, Italy), Celsa (Barcelona, Spain) and ArcelorMittal (NYSE:MT) (Luxembourg).

The letter says: "The consequence of incorrectly implementing the ETS Directive would severely impact our industry, the most efficient in the world, damage our competitive position, hamper our ability to invest and ultimately cost hundreds of thousands of jobs in Europe. The consequence would be the inability of the EU steel industry to grow in the future and to support its metal processing clients, the market segment where EU industry is globally strongest in terms of innovation, activity and jobs."

The letter goes on to say that legislators appear to believe that the proposed unilateral legislative measures will help mitigate climate change. "They are wrong," it baldly states. "Instead, these measures will deprive Europe of investment and increase global emissions as market share is off-shored to non-EU countries with inferior emission standards. The consequence will be more steel imports with a worse CO2 balance at the expense of EU industry, jobs and GDP.

"Steel is making an important contribution to a more sustainable economy. In cooperation with its customers, the construction and the steel processing industries that represent best practice in manufacturing, the steel industry has developed solutions that help to meet the environment objectives set by the European Union. Light-weight steel applications have helped car manufacturers to produce lighter vehicles and therefore reduce CO2 emissions while maintaining high safety standards. The steel industry is also instrumental in developing energy efficiency solutions for the construction industry.

"Without steel," the letter thunders, "there can be no progress on the side of renewables or next generation high yield power plants. The recyclability of steel further allows a stronger recourse to secondary raw materials which again contributes to a more sustainable society."

The letter, with uncompromising drive and seemingly furious intensity, concludes by saying, "The steel industry strongly wants to support continued investment and employment in Europe and is committed to the E.U.'s innovation agenda. It is crucial, however, that the right regulatory framework is created that supports competitiveness. We urge you to support our industry for growth and jobs in Europe."

Having pressed all the correct buttons with reference to sustainability, growth and jobs, the EUROFER letter does not give the legislators much wiggle or spin room, other than returning to the original legislation and holding frank discussions with the industry.

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