ArcelorMittal, thyssenkrupp Steel, and voestalpine are calling for a pragmatic reform of the Emissions Trading System (ETS) to ensure the competitiveness of the European steel industry and accelerate decarbonization.

Three of Europe’s leading steelmakers—ArcelorMittal Europe, thyssenkrupp Steel, and voestalpine—are today jointly calling for urgent, pragmatic reform of the EU Emissions Trading System (ETS) and warning that, without adjustments, the current course threatens to destroy Europe’s industrial base. 

In an article published in the Financial Times , Lakshmi Mittal, executive chairman of ArcelorMittal, articulated the companies’ shared position on how the ETS needs to be reconsidered, to safeguard European steelmaking and all industries it serves.

Together, the three companies account for approximately 60% of integrated steel production in Europe, making them central to the EU’s industrial value chains. All three have committed to decarbonizing their operations, but they emphasize that the policy framework must enable—not hinder—these transformations of the steel production process.

ETS costs are rising, without enablers in place

The three companies note that while the ETS has led to emissions reductions in the energy sector (by approximately 49% between 2005 and 2023), it does not yet offer a viable pathway for energy-intensive industries such as the steel industry. Key incentives for economic decarbonization have not yet been sufficiently developed or are not widely available, including competitive electricity prices, affordable green hydrogen, contracts that offset the CO₂ price differential, carbon capture and storage, and lead markets for low-carbon steel.

Under the current EU ETS framework, steel production costs in the EU are expected to rise by approximately 50% by the early 2030s. Since steel-intensive imports are not subject to equivalent carbon costs and EU steel exports do not receive a discount to offset carbon costs, the consequences of the sharp rise in ETS costs will be far-reaching for European steel production and the entire value chain. 

A risk to Europe's manufacturing backbone

The three companies estimate that, without reforms to the ETS, the EU could face a 30–40% decline in steel-intensive manufacturing activities, putting up to 5 million jobs at risk across the entire value chain.

Such an outcome would run counter to the EU’s ambition, as set out in the “Industrial Accelerator Act,” to increase the manufacturing sector’s share of GDP to 20 percent and would significantly weaken Europe’s economic resilience at a time of increasing global competition.

Pause ETS cost increases until decarbonisation is economically viable

ArcelorMittal, thyssenkrupp Steel, and voestalpine emphasise that they fully support Europe's climate objectives and want to decarbonise. However, the ETS must be adapted to reflect the realities of industrial transformation.

The companies are jointly advocating for:

  • A temporary pause in the increase in ETS costs escalation, maintaining the current level until the key enablers of economically viable decarbonisation are in place.
  • A framework that supports pioneers, so that early decarbonization projects can be launched with confidence. ETS revenues should be directed toward industrial decarbonization, so that the funds accelerate the transition.
  • A balanced approach to import and export competitiveness, addressing the unintended consequences of the current system.

The recent introduction of the Carbon Border Adjustment Mechanism (CBAM) and the upcoming tariff quotas are important steps toward a level playing field. But the companies emphasize that reforming the ETS is the missing link to ensuring that Europe can both decarbonize and maintain a strong industrial base.

"We need to find a way forward for the ETS that promotes decarbonization without undermining competitiveness."

Marie Jaroni, CEO of thyssenkrupp Steel, stated: 

“The ETS needs a reality check. It does not reflect the current situation in European industry, where competitiveness and transformation are becoming increasingly difficult to reconcile. That is why we need a pause in the rise of ETS costs to safeguard the transformation and ensure that ‘pioneers’ like us are not put at a disadvantage. The reform must ensure that climate protection and industrial development successfully go hand in hand, for the future of Europe.”

Herbert Eibensteiner, CEO of voestalpine AG, said:

“Voestalpine is making significant investments through its greentec steel program and will drastically reduce emissions in the coming years. However, in a challenging economic environment, the phase-out of free allowances is already diverting financial resources needed for the decisive phase of the transformation. A pause in the ETS framework—until the necessary conditions are met—is essential to protect these investments and enable further steps toward decarbonization.”

Lakshmi Mittal, executive chairman of ArcelorMittal, stated: 

“A future for the ETS that incentivises decarbonisation without compromising competitiveness must be found. It is not an easy problem to solve, but reform of the ETS is essential and we applaud Europe’s policymakers for putting the topic back on the agenda. The choice they face is not between climate ambition and competitiveness. The choice is between a climate strategy that strengthens Europe’s resilience and economic security, and one that hollows it out.”