European steelmakers could face an annual carbon cost of €8.2 billion in 2031, compared with €3.4 billion in 2026, under a scenario examined by EUROFER in a position paper calling for stronger protection during the industry’s transition.
The association’s calculation assumes that ongoing decarbonisation projects are successfully implemented. Even under that assumption, EUROFER estimates the sector’s corresponding carbon cost at approximately €5.7 billion in 2030.
The figures represent a scenario based on specified policy and carbon-price assumptions rather than an observed industry bill or an independent forecast of future EU ETS allowance prices.
Carbon-price assumptions drive projected exposure
EUROFER’s scenario uses a carbon price of €100 per tonne for 2026-2030, rising to €150 per tonne for 2031-2035.
The association links the increase in uncovered carbon costs to several policy developments, including the withdrawal of free EU ETS allowances, the CBAM transition and changes to emissions benchmarks.
Under the scenario, successful investment in decarbonisation does not prevent a substantial increase in the industry’s remaining carbon-cost exposure between 2026 and 2031.
Steelmakers seek slower withdrawal of protection
EUROFER argues that the pace at which carbon costs are increasing is not aligned with the availability and affordability of the energy and infrastructure required for industrial decarbonisation.
The association is calling for a slower reduction in protection during the coming years. It also identifies export exposure as an unresolved issue for European steel producers.
The requests contained in the position paper are policy proposals and do not represent an adopted change to EU legislation or the existing carbon-market framework.
Carbon costs rise as replacement production is financed
The policy issue identified by EUROFER concerns the timing of rising uncovered carbon costs relative to investment in replacement production routes.
A slower withdrawal of protection could reduce the near-term adjustment in carbon costs for steelmakers, while also affecting the strength of the carbon-price signal during the transition.
