Jernkontoret comments on the draft delegated regulation for technical screening criteria supplementing the taxonomy regulation
Jernkontoret supports the purpose of the taxonomy, i.e. to make capital available for large investments that are needed to reach the EU climate targets and a sustainable growth. But, with these proposed criteria, the main part of steel industry would not be taxonomy eligible. This would hamper steel companies' possibilities to make efficient efforts in technology development and investments towards the climate targets. To direct capital flows towards activities that are driving the development, the criteria should mirror the important function that steel industry fulfills as an enabler both for climate mitigation and climate adaption. We propose to include a life cycle perspective to handle both the value chain in production and steel as an enabler in other value chains.
With these proposed criteria, the main part of steel industry would not be taxonomy eligible. This would hamper steel companies' possibilities to make efficient efforts in technology development and investments towards the climate targets.
To the European Commission
Jernkontorets d-nr: 93/20
Jernkontoret also supports the position of Eurofer
General view
Jernkontoret supports the purpose of the taxonomy, i.e. to make capital available for large investments that are needed to reach the EU climate targets and a sustainable growth. European steel industry is part of this transition and is already investing heavily in new process technology and large development projects. Swedish steel industry has developed a climate roadmap with concrete measures to decrease and eliminate climate related emissions. This includes innovative and ambitious research projects already started to develop new technology that will tackle the largest emission sources.
The steel industry also continues to develop new products that contribute to decreased emissions when used in various end-products in society. In addition, most products of today´s society are made of steel or are produced using steel. And regarding transformation towards a fossil-free future, a precondition for wind power mills, vehicles, white goods etc. to become more efficient and able to contribute to the climate targets is to use specialized steel. This means that steel industry has an essential role to play in terms of climate change mitigation and climate change adaptation
As an enabler for the transition the taxonomy should also focus on the future in order to direct capital flows towards activities that are driving the development. The criteria should therefore mirror the important function that steel industry fulfills as an enabler both for climate mitigation and climate adaption.
Technical screening criteria on climate mitigation for manufacture of iron and steel
The criteria presented in the delegated act is focused on classifying companies from a state- of-the-art situation and considering a limited part of their operation. Note that the TEG report did propose a criterion referring to investment plans that would result in actions towards decreased emissions. Such a criterion, which to some extent addresses the transition, should therefore be included in the delegated act.
The delegated act proposes criteria according to the principle of ETS benchmarks. This includes emission intensities for intermediate products including some processes along the value chain. These intensity levels take no account of the variety of steel products and neither of the fact that the value chain includes many more steps. The principle of ETS benchmarks is aimed at handling free allocation of emission allowances and not to evaluate company sustainability.
We propose to include a life cycle perspective to handle both the value chain in production and steel as an enabler in other value chains. Using, for example, the standard EN 19694-2 would make it possible to calculate emissions for iron and steel production in a comparable manner.
The delegated act proposes eligibility for EAF (electric arc furnace) steel production using at least 90% scrap. This criterion does not take into account the different steel qualities such as high alloy or stainless steel, which are mainly scrap based but unable to reach such high percentage.
With these proposed criteria, the main part of steel industry would not be taxonomy eligible. This would hamper steel companies' possibilities to make efficient efforts in technology development and investments towards the climate targets. This would certainly not be in line with the purpose of the taxonomy.
Other sector criteria
Electrification is the main solution to reduce and eliminate climate emissions from steel industry. Increasing supply of fossil free electricity is therefore crucial to enable this transition and the taxonomy criteria should not limit or counteract the development and increased use of any fossil free energy sources, such as hydro or nuclear power.
Jernkontoret
Bo-Erik Pers, CEO
Helén Axelsson, Senior Advisor
