Hoekstra rules out ETS suspension for the steel industry

Brussels – No free rein to the steel sector to support the defense industry’s grand re-launch. Translated: no exclusion from the ETS, the EU’s emission certificate trading mechanism. Word of Wopke Hoekstra. The European Climate Commissioner wants to shed light on an issue, that of defense, which revives the debate on the sustainability agenda. Jadwiga Wiśniewska, a Polish MEP of the Conservatives (ECR), believes that “the steel industry will be crucial to ensuring an adequate material base for future armament programs” and, therefore, suggests that the EU executive should exempt it from the common rules on CO2 emissions.

No way, replied Hoekstra. “The Commission has no plans to suspend the ETS.” Something will change, however, as the EU executive “is preparing a comprehensive review of the ETS Directive by July 31, 2026, as required under the existing directive.” Therefore, legislative changes could be possible for the European steel industry and defense-related steel, but there is no backtracking on the emission quotas market.

Hoekstra defends EU regulations and their scope. The ETS emissions trading system “enables the EU to achieve its climate targets at the lowest cost by allowing the market to set the carbon price,” he said. In addition, it ‘has in-built features to protect industries such as steel from carbon leakage,” meaning the displacement of production and emissions outside the EU. For the steel sector, these include “the free allocation of emission allowances, the possibility of state aid to compensate indirect carbon costs for electro-intensive production” such as electric arc furnaces. In short, Brussels has no reason to exempt the steel world from sustainability rules, not even because of the New European Defense Agenda.