HEAVY INDUSTRY: JOINT DECLARATION ON EUROPEAN STEEL
Mathieu Gitton
Former Director of representative office in Brussel with expertise in corporate strategy and lobbying
The European steel industry is undergoing profound transformations, caught between the need to decarbonize its production processes, the rise of low-cost imports, and the pressure to preserve industrial jobs essential to the EU’s economic sovereignty. On February 27, 2025, France, Belgium, Italy, Spain, Luxembourg, Romania, and Slovakia signed a joint declaration in Paris, calling for urgent measures to support the integrated route (blast furnaces) of steel production, while also fostering the growth of low-carbon production in electric arc furnaces (EAF). This commitment precedes the creation of a heavy industry alliance, set to be officially established at the Competitiveness Council on March 12 in Brussels.
THE REALITY: A STEEL INDUSTRY IN CRISIS
According to this non-paper, the steel industry represents approximately 310,000 direct jobs and nearly 2.2 million indirect jobs across Europe, generating a turnover of €130 billion. Despite this industrial weight, the sector faces unfavorable market conditions: declining EU demand (from 160 Mt in 2018 to just 126 Mt in 2023), global overcapacity reaching 600 Mt (equivalent to 275% of European capacity), and foreign competition benefiting from lower production costs, especially regarding energy prices. Meanwhile, regulatory pressure is increasing, notably with the upcoming Carbon Border Adjustment Mechanism (CBAM), designed to prevent the risk of carbon leakage. Investment prospects in decarbonization are further hampered by uncertainty over internal market rules beyond 2026, as steelmakers fear a surge in ultra-low-cost imports, potentially misaligned with Europe’s environmental standards.
STRENGTHENING CBAM AND IMPROVING TRACEABILITY
The seven signatory states emphasize the urgent need to reinforce the CBAM, making it an effective decarbonization tool on a global scale. They stress the necessity of thoroughly assessing carbon leakage across the entire supply chain (including exports) and propose introducing default emissions values based on the geographical origin of imported products. The goal is to prevent the mere relocation of polluting production to third countries with laxer regulations while reserving “low-carbon” steel for the European market without achieving actual global emission reductions. The signatories also insist that a detailed sectoral analysis should precede any potential extension of CBAM to indirect emissions, particularly those tied to energy supply. On this point, they argue for striking a balance between climate ambition and the need to protect the competitiveness of energy-intensive steel plants, where electricity-related cost increases could become a major barrier to operations.
WHY A HEAVY INDUSTRY ALLIANCE?
The upcoming heavy industry alliance aims to pool resources and coordinate industrial policies across several key European countries, recognizing that steel production—like cement and other metals—remains a strategic pillar for the EU’s manufacturing autonomy. The goal is to promote integrated solutions, covering trade defense (anti-dumping instruments and safeguard measures), energy supply security, R&D investments for low-carbon steel, and the establishment of a European steel market where cleaner products enjoy strong demand.
The signatory states also warn of the need to anticipate post-2026, when existing safeguard measures expire. Without a new protection mechanism, import volumes risk skyrocketing, further exacerbating the underutilization of European steel capacity and deepening its reliance on foreign sources.
THE URGENT NEED FOR DECARBONIZATION
The signatory governments highlight that the low-carbon transition of the steel industry requires substantial support, particularly for the EAF sector, which is seen as a key pathway for decarbonization—provided it is powered by low-carbon electricity. However, modernization and decarbonization projects remain limited, hindered by the rising energy costs across Europe and regulatory uncertainty beyond 2026.
The ministers outline several possible levers to overcome these barriers:
They also emphasize the importance of scrap metal recycling, which plays a crucial role in reducing the carbon intensity of production.
CONCLUSION
This joint declaration of February 27, 2025, backed by France, Belgium, Italy, Spain, Luxembourg, Romania, and Slovakia, sets out an emergency plan for the European steel industry—one of the most emblematic sectors of heavy industry on the continent. The adjustment of CBAM, control of low-cost imports, the implementation of dedicated financing, and the acceleration of cleaner production methods all stand as key priorities leading up to 2026.
As steel remains vital for automotive, construction, energy, and defense industries, these states aim to safeguard not only hundreds of thousands of jobs and critical expertise but also support the sector’s necessary shift toward low-carbon operations. The lessons from this initiative are expected to extend to the entire heavy industry, with the European alliance set to be formalized at the Competitiveness Council on March 12.
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