CBAM, The Green Steel Lie, Hydrogen and the European Dream of Clean Steel
The European Union is to become CO2 neutral by 2050. With its “Fit for 55” plans and the “European Green Deal”, the European Commission has set ambitious targets. 55% emission reduction by 2030 and CO2 neutral by 2050. In addition, the Carbon Border TAX CBAM (Carbon Border Adjustment Mechanism) is still planned to intercept dirty products at the border to the EU and to impose a CO2 price.
One might think that’s a great idea. After all, we want our children to have something from the earth at some point – apart from dust and storms. Scientifically, there is no question that we are heading for a climate catastrophe if we do not change.

CBAM – Protecting domestic industry from dirty products from abroad
Part of the EU plan is that dirty products such as fertilizer, cement, aluminum and steel should no longer be imported into the EU if they have not been produced according to EU specifications. Otherwise, carbon taxes will be incurred at the EU’s external borders with the Carbon Border Adjustment Mechanism (CBAM). For a ton of steel, this is probably two EU ETS certificates for currently 60 euros each. (Status September 20, 2021)
EC’s CBAM argument: level playing field for all market participants
With CBAM, the European Commission wants to punish countries that do not set such high standards in the green transformation and force them to adapt to the EU standards with the carbon tax. Above all, the EU repeatedly mentions its new favorite enemy China. However, the problem could be that China wants to take on a pioneering role in climate protection and is really stepping up the pace. And the EU27 has so far achieved little apart from declarations of intent.
Is the EU Carbon Border Tax just a Safeguard Measure 2.0?
If you take a look at the ambitions of the European Commission to make the EU CO2 neutral by 2050, it becomes clear relatively quickly that the EU Carbon Border Tax CBAM is just a new instrument to protect its own steel and aluminum producers.
Dirty raw materials: Yes – dirty products: No
The EU continues to simply let “dirty” raw materials through and blocks primarily only those products where its own industry has lacked any will to modernize for years and where lobby millions have flowed vigorously. Especially in the case of steel, aluminum, cement and fertilizers. You only have to look at where most of the anti-dumping, anti-subsidy and Safeguard measures are located and you know what is to be blocked with CBAM in the future.
With China and other not so CO2 friendly producing Asian countries that want to challenge Europe’s position in economic competition, Brussels has also created a new enemy image. And is working hard to further demonize it.
EU Safeguard and U.S. Section 232 no longer tenable in the long run
Approval for the EU Safeguard market protection measures and the U.S. Section 232 tariffs is falling precipitously. High prices, tight availabilities and logistical problems are raising more and more voices calling for an end to both measures. The latest Safeguard extension in 2021 could only just be pushed through by the EC – many smaller member states voted against it.
Carbon Border Tax: The EC’s new wonder weapon in the fight against unwanted imports
And so it comes as no surprise that the EC has pulled CBAM out of its hat. The carbon border tax CBAM can be nicely used as a means against climate change and as a new market protection. As was to be expected, other countries have picked up on this theme, most notably the United States under President Joe Biden, and viewed it favorably. Their own carbon border tax systems, modeled on the EU, are to follow around the world.
U.S.-EU punitive tariffs: And suddenly there is movement here
In line with the Green Deal and CBAM, there is suddenly movement in the stalled negotiations between the EU and the U.S. on the lifting of mutual punitive tariffs on steel and aluminum. A solution seems close, if both sides are to be believed. The target for an agreement is November 2021.
U.S. steel industry cleaner than Europe’s
In this regard, the United States is actually ahead of the European Union. The U.S. steel industry has traditionally relied on so-called EAFs or electric arc furnaces, which consume huge amounts of energy but produce less CO2 (EAF approx. 0.240 tCO2 per ton of steel). This is in contrast to European steel, which is produced using traditional methods and the pig iron is melted in blast furnaces fired with coking coal (BF-BOF approx. 1.4 tCO2 per ton of steel). Which is not good at all for the CO2 balance.
U.S. steel comes more than 66% from EAFs
According to the European Steel Association EUROFER, more than 52% of EU steel mills produce their steel using the conventional BF-BOF process. Whereas, according to information from the American Iron and Steel Institute (AISI), more than 2/3 of U.S. steel comes from EAFs.
German steel mills emit the most CO2 in the EU
According to data from the American Iron and Steel Institute, German steel mills alone emitted 1/3 more CO2 per ton of steel per year than the US steel industry. By comparison, Germany produces about 42 million tons of steel per year, according to EU data. The United States, according to AISI information, just over 80 million tons. – fortunately, EU steelmakers get their ETS allowances allocated for free. The 4.8 million tons of CO2 emissions that Germany would need to overtake the entire U.S. steel industry don’t really matter anymore.
India vs. China – a forgotten equation
While there is a global consensus that China is the main scapegoat for its dirty steel production and immense overcapacities, softer tones are being sounded on the European side towards India. If you look at the figures from AISI, the CO2 emissions per ton of Indian steel are only marginally smaller than those of China, and both are currently still well above 2 tCo2 per ton of steel.
Indian steel mostly from dirty EAF production
Even though India produces more than 50% of its steel from EAFs (which is actually the best choice in terms of CO2 emissions) the most important Indian energy source is coal. Not only electricity, but also Direct Reduced Iron (DRI) there primarily requires coal products as an essential ingredient. And DRI is needed for steel production in EAFs.
India produces more than 100 million tons of steel
India is already the second largest steel producer after China, producing more than 100 million tons of steel per year. In addition, it wants to take over from China as the world’s largest steel producer, now that the Chinese government wants to put its own steel production on a completely new footing.
EU: Loud against China, quieter against India
Cheap Indian steel continues to enjoy great popularity in the EU and regularly manages to significantly exceed its Safeguard quotas. And while Chinese steel is a constant target of the European steel lobby in the fight against imports and the main target of EU market protection measures, the tone towards India is much quieter. Even though both countries are almost equal in terms of steel exports to Europe. And this despite the fact that India only has just under 10% of China’s production capacity.
Fortunately, it is not noticeable here that one of the most important stakeholders of the European steel lobby runs the largest steel company in the world outside China and that you cannot compare Europe with India and individual companies that belong to the same group but are located on different continents. Right?
In the end: EU steel is terribly dirty
The EAF gives the United States an edge over European producers. So that means the EU first needs to add a shovel of coke or, in the future, natural gas. Because it won’t be possible to get their steel green as quickly as the Europeans claim.
European steel to become clean – with green hydrogen
Read in the second part of our series how the European Commission plans to get European steel clean. What role green hydrogen will play in this and whether the EU is at all capable of becoming CO2 neutral by 2050. And what role powerful consultancies are playing in the EC’s blueprint for the European Green Deal.
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