Europe’s leading steel producers have urged the European Union to maintain a stable carbon pricing framework and strengthen the Carbon Border Adjustment Mechanism (CBAM), arguing that both policies are essential to support more than €10 billion in planned investments in low-emission steel production and modernised industrial facilities across Europe.
The position was presented at the European Parliament on June 30, 2026, in a joint statement issued by Outokumpu, SSAB, Salzgitter, Saarstahl, Dillinger and SHS – Stahl-Holding-Saar. The companies stated that weakening the EU carbon market would undermine the economic rationale behind already-approved decarbonisation projects while benefiting producers that have delayed investment.
The steelmakers said that long-term investment decisions involving low-emission production technologies require confidence that the financial value of avoided carbon emissions will remain in place throughout the operating life of new industrial assets.
Steel Industry Calls for Long-Term ETS Stability
The companies called for the EU Emissions Trading System (ETS1) Linear Reduction Factor to remain at 4.4% until at least 2035, with the framework beyond that date aligned with the EU’s 2040 climate objectives. They also requested that the existing CBAM factor, the timetable for phasing out free emissions allowances and the integrity of the Market Stability Reserve remain unchanged.
According to the statement, investment decisions covering electric arc furnaces (EAFs), direct-reduced iron (DRI) production, hydrogen-ready technologies, energy-efficiency upgrades and comprehensive plant modernisation depend on predictable carbon pricing over the full lifespan of these assets. The companies said that the commercial case for low-emission steel production relies not only on carbon pricing but also on customer demand, reliable energy supplies, electricity grid capacity, infrastructure development and measures that prevent carbon leakage from imports produced under less stringent environmental standards.
They added that Europe’s steel sector faces broader competitiveness challenges including elevated electricity prices, dependence on fossil fuels, infrastructure constraints and persistent global steel overcapacity.
CBAM Expansion Identified as Key Industrial Priority
The steel producers argued that the effectiveness of CBAM depends on closing remaining gaps in the mechanism and expanding its coverage. Following the 2023–2025 transitional period, the European Commission introduced the definitive CBAM regime from 2026, applying a carbon price to embedded emissions in imported carbon-intensive products. The mechanism currently covers cement, iron and steel, aluminium, fertilisers, electricity and hydrogen.
Importers exceeding the 50-tonne threshold are required to obtain authorised CBAM declarant status, purchase CBAM certificates and report embedded emissions. Carbon prices already paid in the country of production may be deducted from the obligation.
The steelmakers called for the inclusion of steel-intensive downstream products, measures to prevent potential circumvention before it develops and a permanent solution covering exports from the European Union. They warned that without wider downstream coverage, manufacturing activity could shift from primary steel products already covered by CBAM to finished goods such as machinery, industrial components, household appliances, construction products and other metal-intensive equipment that remain outside equivalent carbon treatment.
Investment Decisions Depend on Carbon Policy Certainty
The joint statement characterised carbon pricing as a prerequisite for retaining industrial production, employment and value creation within Europe. The companies argued that reducing the ETS carbon price after investments have been approved would weaken the comparative economics of low-emission steel production and increase uncertainty for future capital allocation decisions.
They also noted that purchasing decisions are increasingly influenced by three factors simultaneously: steel prices, embedded emissions and the regulatory carbon costs attached to imported products. A consistent ETS-CBAM framework, the statement said, would provide buyers with a clearer basis for comparing European low-emission steel, imported steel supported by verified emissions data and downstream products whose treatment may evolve as CBAM coverage expands.
Exporters Face Expanding Carbon Reporting Requirements
The statement highlighted growing compliance requirements for steel exporters outside the European Union, including producers in the Western Balkans, Turkey and neighbouring markets.
According to the companies, CBAM compliance will require plant-level embedded emissions data, accurate product classification, precursor material tracking, documentation of electricity sources, internal monitoring, reporting and verification (MRV) systems, evidence of any domestic carbon pricing and complete audit trails supporting EU importers. They stated that exporters capable of supplying verified, product-specific emissions information will be better positioned within European supply chains than producers relying on generic emissions estimates or incomplete documentation.
The companies also reiterated the need for a permanent export mechanism, noting that European producers continue to face carbon costs when competing in third-country markets where rival suppliers may not incur equivalent regulatory expenses.
ETS Revenue Recycling Seen as Support for Industrial Transformation
The steelmakers proposed redirecting ETS1 revenues toward industrial decarbonisation projects in sectors covered by CBAM. They noted that steel decarbonisation requires substantial capital investment and supporting infrastructure. Electric arc furnaces depend on adequate scrap quality, stable electricity supplies and sufficient grid capacity, while hydrogen-ready DRI projects require hydrogen production, storage and transport infrastructure. Modernisation of integrated steel plants also involves technology upgrades, permitting procedures and extended construction periods.
According to the statement, recycling ETS revenues into industrial transformation would help narrow financing gaps while maintaining the carbon price signal underpinning investment decisions.
The companies added that the expanding role of CBAM is increasing due diligence requirements across industrial supply chains. Importers will require more detailed supplier information, financial institutions will need to assess carbon-cost exposure, buyers will seek contractual access to emissions data and technical advisers will increasingly integrate engineering, energy sourcing, metering systems, enterprise data and EU reporting requirements into unified compliance processes.
