Joint letter on the revision of the Free Allocation Regulation (FAR)

A joint letter from multiple environmental and industry organizations argues that the European Commission's draft proposal for the Free Allocation Regulation (FAR) revision ignores previous political agreements by continuing to differentiate between steel production processes. The signatories contend that the current FAR incentivizes carbon-intensive iron ore processing over the use of ferrous scrap, which hinders the EU's circular economy goals and the steel sector's alignment with the 1.5°C Paris Agreement limit. They call for a shift to a product-based approach to free allocation to encourage the substitution of ore with scrap and accelerate the transition to net-zero steelmaking.

• The European Commission's draft proposal for the 2026-2030 FAR revision is criticized for ignoring a December 2022 agreement between the European Parliament and the Council of the European Union, which stated that free allocation of emission allowances should be "independent of the feedstock or the type of production process".
• The current FAR framework creates an economic disadvantage for using ferrous scrap by providing free allowances for carbon-intensive feedstocks used in iron ore processing, thereby incentivizing production methods with high contents of transformed ore.
• The EU's potential for circular steel production is currently underutilized, as evidenced by the annual export of nearly 20 million tonnes of ferrous scrap from the EU.
• The signatories argue that the EU Emissions Trading System (ETS) has failed to align the steel industry—the EU's most polluting industrial sector—with the 1.5°C limit of the Paris Agreement.

APA

Carbon Market Watch (2023). Joint letter on the revision of the Free Allocation Regulation (FAR). https://carbonmarketwatch.org/wp-content/uploads/2023/12/Joint-letter-on-the-FAR-revision-1.pdf

Chicago

Carbon Market Watch. Joint letter on the revision of the Free Allocation Regulation (FAR). 2023. https://carbonmarketwatch.org/wp-content/uploads/2023/12/Joint-letter-on-the-FAR-revision-1.pdf.

Wikipedia

{{cite press release |author=Carbon Market Watch |title=Joint letter on the revision of the Free Allocation Regulation (FAR) |date=5 December 2023 |url=https://carbonmarketwatch.org/wp-content/uploads/2023/12/Joint-letter-on-the-FAR-revision-1.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{carbonmarketwatch2023joint, author = {{Carbon Market Watch}}, title = {{Joint letter on the revision of the Free Allocation Regulation (FAR)}}, publisher = {Carbon Market Watch}, year = {2023}, month = dec, url = {https://carbonmarketwatch.org/wp-content/uploads/2023/12/Joint-letter-on-the-FAR-revision-1.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }