EU to Boost Metal Sectors with Energy Relief and Safeguards

The EU’s long-awaited action plan for the steel and metal sectors, set to be released this week, is expected to address key issues such as energy costs, carbon border tariffs, and trade protections for the industry. According to two slightly varied drafts of the plan seen by Euractiv, the European Commission is preparing several measures aimed at ensuring a sustainable and competitive future for these vital sectors.

The plan acknowledges that Europe’s domestic steel and copper production largely meets EU demand, but there are significant gaps in other metals. Specifically, EU-based producers supply just 46% of Europe’s aluminum needs and 25% of its nickel demand. As the drafts emphasize, these metals are not only crucial for industrial applications but are also essential for the EU’s defense industry.

Energy Support Measures

One of the central focuses of the plan is to address the high energy costs faced by the steel and metal industries. The Commission is consulting with EU member states on a “clean flexibility” state aid tool. This initiative would encourage industries to commit to consuming clean electricity, potentially supported by Power Purchase Agreements (PPAs). According to the drafts, the Commission is urging EU countries to make full use of existing state aid and energy rules to help reduce energy costs for energy-intensive industries.

In addition, the Commission plans to release several guidance documents in the second quarter of 2025. These documents will lay out provisions for anticipatory investments in energy grid projects and potential cuts to energy network tariffs specifically for the metals sector. The Commission also plans to propose measures that would facilitate access to the grid for electrification projects in energy-intensive industries.

However, the drafts show some variation in how the Commission plans to address carbon costs embedded in the electricity used by industries. One draft suggests that the Commission will work toward making compensation for these carbon costs permanent after 2030, while another version promises only “adequate measures.”

Carbon Border Adjustment Mechanism

The action plan also includes changes to the EU’s Carbon Border Adjustment Mechanism (CBAM), which imposes a carbon price on imported goods such as steel, aluminum, and fertilizers. The drafts indicate that the Commission is planning to introduce measures to address the competitive disadvantage faced by EU exports to countries with weaker climate regulations.

According to one draft, the Commission will propose a solution to this issue in the form of a non-binding communication by the second quarter of 2025. The other draft promises to “address the problem” without further specifying the details. Furthermore, the Commission is preparing a CBAM anti-circumvention strategy, with plans to extend the mechanism to cover certain steel and aluminum-intensive downstream products by the end of 2025.

Trade Safeguards and Global Overcapacity

In response to concerns about global steel overcapacity, the action plan also outlines new trade safeguards. The EU’s current shield against the influx of cheap steel imports is set to expire in 2026. The drafts suggest that this issue is unlikely to resolve by then, and the Commission is prepared to use trade defense measures to protect EU industries. One draft specifically mentions the possibility of launching an investigation into the aluminum sector in response to recent US tariffs on EU aluminum, while the other draft highlights that such an investigation would begin immediately upon a substantiated request.

Additionally, the drafts signal the possibility of an expedited investigation into ferroalloys safeguards. The Commission is also focusing on boosting the circular economy and encouraging the use of low-carbon metals. Both drafts mention the role of “lead markets” in driving the adoption of clean metals across both public and private sector.