Steel CEOs say EU carbon reforms threaten jobs, investment

LONDON (Reuters) - Steelmakers in Europe have written to EU leaders urging them not to burden the industry with extra carbon emissions costs they say would make them uncompetitive against foreign rivals and raise the risk of job losses and plant closures.

Draft reforms to the EU Emissions Trading System (ETS) post-2020, agreed in outline by the European Parliament in February, aimed to balance greater cuts in greenhouse gases with protection for energy-intensive industries.

Since then, negotiations between representatives of the European Parliament, governments and the European Commission have made the proposals tougher, the steel industry says.

Environmentalists say the law should not be watered down.

The CEOs of 76 steel makers, including Arcelor-Mittal, Germany’s Thyssenkrupp and Austria’s Voestalpine, say the reforms as they stand would add unmanageable costs and mean pollutants were produced by manufacturers in other regions.

“You can avoid burdening the sector with high costs that will constrict investment, or that will increase the risk of job losses and plant closures in the EU,” the CEOs say in an open letter, dated May 28, to EU heads of state and government.

Writing before more closed-door talks on Tuesday on the carbon market reforms, the CEOs say the higher costs for emitting carbon dioxide would favor imports.

“In its current form, the EU ETS favors steel imports from third country competitors that do not have such costs and which have a far higher carbon footprint than steel made in the EU,” the letter says.

It urges EU leaders “to help preserve the sustainability and global competitiveness of the European steel industry.”

The EU ETS is meant to be the prime tool to enforce EU emission cuts in line with the Paris Agreement on Climate Change.

But it has been dogged by a surplus of permits for polluting industries that have depressed prices, while industry leaders have repeatedly objected to reforms to strengthen it.

For the European steel industry, which has battled global oversupply, the European Union has agreed measures to protect it from dumped imports or those found to be sold at unfairly low prices by nations, such as China.

China has urged the EU to treat Chinese firms fairly and abide by the World Trade Organization’s rules.

China is developing its own carbon markets to curb emissions, which environmental campaigners say undermines the European steel industry’s argument that it helps to protect against more polluting production elsewhere.

A spokesman for Malta, the nation in charge of steering EU debate until the end of June, said the Maltese presidency was working to ensure constructive talks on Tuesday.

Editing by Edmund Blair