Emissions Trading System exemptions betray the steel sectors’ power and politicians’ lack of mettle

The author contends that the steel industry's exemption from the EU ETS benchmark reform, secured through lobbying—particularly by Germany—shields polluting installations from necessary price signals. While the sector faces high costs for transitioning to Direct Reduced Iron (DRI) technology, the document argues that free allowances do not bridge the investment gap and instead reduce the pressure to modernise. The author suggests that the ETS should make polluting more expensive to incentivise the shift to low-carbon steel, rather than serving as a protectionist tool.

• The steel sector has been exempted from the EU ETS benchmark reform, meaning that the 28 most polluting installations, which collectively emit an average of 129 million tons of CO2 annually, will not see their free allocations reduced to reflect industry progress.
• The exemption was driven by the strategic importance of the industry in Germany, which has the most blast furnaces in the EU and supplies the German automotive industry, leading the German government to lobby the other 26 EU member states.
• While approximately 37 mt of the EU's 70 mt primary steel-making capacity is expected to transition to Direct Reduced Iron (DRI) technology by 2030, some blast furnace lifetimes may be extended by up to five years as commercial-scale DRI only arrives gradually from 2025.
• The document asserts that free allowances and benchmark exemptions do not solve the financial 'cost gap' for new technology—estimated at €3 billion per installation—and that other instruments like Carbon Contracts for Difference are required instead.

APA

Frank, S. (2023). Emissions Trading System exemptions betray the steel sectors’ power and politicians’ lack of mettle. Carbon Market Watch. https://carbonmarketwatch.org/2023/05/05/emissions-trading-system-exemptions-betray-the-steel-sectors-power-and-politicians-lack-of-mettle/

Chicago

Frank, Sabine. Emissions Trading System exemptions betray the steel sectors’ power and politicians’ lack of mettle. Carbon Market Watch, 2023. https://carbonmarketwatch.org/2023/05/05/emissions-trading-system-exemptions-betray-the-steel-sectors-power-and-politicians-lack-of-mettle/.

Wikipedia

{{cite press release |last1=Frank |first1=Sabine |title=Emissions Trading System exemptions betray the steel sectors’ power and politicians’ lack of mettle |publisher=Carbon Market Watch |date=5 May 2023 |url=https://carbonmarketwatch.org/2023/05/05/emissions-trading-system-exemptions-betray-the-steel-sectors-power-and-politicians-lack-of-mettle/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{frank2023emissions, author = {Frank, Sabine}, title = {{Emissions Trading System exemptions betray the steel sectors’ power and politicians’ lack of mettle}}, publisher = {Carbon Market Watch}, year = {2023}, month = may, url = {https://carbonmarketwatch.org/2023/05/05/emissions-trading-system-exemptions-betray-the-steel-sectors-power-and-politicians-lack-of-mettle/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }