We support the EU's climate goals and believe the European steel industry should play its part in reducing emissions. We are concerned, however, that the EU's Emissions Trading System (ETS), as currently outlined, will not address those emissions at the global level.

We support policy that incentivises long-term investment in carbon efficiency and low-carbon technology. As currently configured, the EU-ETS does not do this in our view - one shared by a number of stakeholders, including many investors and NGOs.

The design of the EU-ETS system's benchmarks means that the steel industry is one of the most under-allocated industries in Europe. We therefore expect to start phase 4 without any surplus carbon allocation, unlike many other industrial sectors. Even the most efficient steel plants in Europe are likely to face significant costs resulting from the system – costs that producers importing steel into Europe do not have to bear. The result could make the European industry, which employs 320,000 people and is at the forefront of sustainable steel-making, less competitive against steel imported from regions where producers may face less incentive to reduce emissions. The danger is that this will mean Europe is in effect importing carbon and exporting jobs.

If Europe is to lead the way on lower carbon steel, we believe policy-makers must take this danger into account. If the carbon price within Europe were applied instead as a border adjustment on the carbon content of imported steel, there would be less concern about carbon leakage, and fairer competition between European-made steel and imports to the European market. Most importantly, it would incentivise the development of lower-carbon steel everywhere, with a real effect on global emissions. We continue to advocate such a policy.