Source: European Steel Association (EUROFER), position paper on the EU ETS revision published on 24 September 2026; figures also reported by Argus Media and Mysteel
The European Steel Association (EUROFER) has urged the European Union to slow the withdrawal of free carbon allowances for sectors covered by the Carbon Border Adjustment Mechanism (CBAM), warning that the bloc's steel industry faces a sharp rise in carbon costs during the transition to the new import regime. In a position paper published on 24 September, the association said annual carbon costs for the European steel sector could climb from around 3.4 billion euros in 2026 to roughly 5.7 billion euros in 2030 and about 8.2 billion euros in 2031, even if every decarbonisation project now under way is completed.
For steel produced by the conventional blast furnace route, EUROFER estimates that carbon costs could roughly double to about 100 euros per tonne by 2030 and exceed 200 euros per tonne from 2031, adding that the figure could reach around 230 euros per tonne once the proposed CBAM factor and a revised hot metal benchmark are taken into account. Under the European Commission's proposal, the sector's free allocation shortfall would reach about 50 percent in 2030 and 76 percent in 2031. The association argues that such a pace of withdrawal would erode the financial capacity of steelmakers to invest in low-carbon production and raise the risk of carbon leakage for European producers and their downstream customers.
EUROFER has therefore proposed a much slower phase-out over the next five years. It wants the CBAM factor held at 95 percent in 2028, above the 91.5 percent envisaged by the Commission, before declining more gradually to 90 percent in 2030 and 82 percent in 2031, and then following a smoother trajectory down to zero in 2038. The association also asked the EU to extend beyond 2030 the provision that keeps the industry's main benchmark for hot metal aligned with prevailing blast furnace technology, saying the benchmark value for 2031-2035 could otherwise fall by as much as 50 percent.
The association pointed to stalled investment as evidence of the pressure. Decisions have been taken on about 35 million tonnes a year of low-carbon steel capacity, with commissioning expected between 2027 and 2032, but projects covering more than 10 million tonnes a year have been halted because of high energy costs, insufficient low-carbon hydrogen supply, infrastructure constraints, permitting delays and uncertain public funding. EUROFER Director General Axel Eggert said that withdrawing carbon leakage protection too quickly risks undermining the very investments needed to decarbonise. The group also called for a structural solution to protect exports, noting that producers outside the EU pay European carbon costs only on steel sold into the bloc while European producers bear them wherever their steel is sold, and proposed that all revenue from the phasing out of free allowances be reinvested in the sectors concerned.
