No industry, no tanks: EU bets on more clean steel to secure its future

BRUSSELS — The EU needs to build more tanks — and there’s no reason why those tanks can’t be green.

In a bid to save its decaying steel and metal industries, the EU has formulated a plan to protect the sector against unfair competition from abroad, high energy prices and a looming trade war with the U.S. — all while helping it go green. 

With this strategy — which is largely based on leveraging the EU’s arsenal of trade measures against cheaper foreign products and subsidizing the sector’s decarbonization — Brussels is hoping that saving metals manufacturing will also boost the defense industry and ultimately, keep Europe safe.   

“A main battle tank contains 50 to 60 tonnes of high-quality steel, a self-propelled artillery system, up to 100 tonnes, a fighter aircraft 3 tonnes of aluminium,” the Commission writes in the plan, adding that “a stable and resilient supply chain for these materials is critical to strengthening the European Defence Technological and Industrial Base, ensuring the EU’s preparedness and internal security.”

The 19-page document acknowledges how central steel has been for European integration, with the bloc’s first steps towards cooperation hailing back to the European Coal and Steel Community formed after World War II.

“The choice was clear, Europe had to save its steel. We owe this to our history. Europe started with steel,” EU industry chief Stéphane Séjourné said at a press conference on Wednesday, referring to the same landmark 1951 agreement which eventually evolved into the European Union. 

What started as a peace-building project by tying French and German interests together is now rapidly turning into a blueprint for manufacturing deterrence against an expansionist Russia unrestrained by U.S. pledges to come to Europe’s defense. 

It was no coincidence that the EU revealed major plans on defense, finance and industry on the same day. The bloc’s rude awakening in the first months of Donald Trump’s second term as U.S. President means all the issues Europe faces have been dialed up to twelve.

In particular the steel and aluminum industries will feel the impact of Trump’s imposition of 25 percent tariffs on all U.S. imports of the metals a week ago.

Foremost a signal to the heavy industry that the Commission recognizes their problems, the Steel and Metals Action Plan paints sectors in near-inevitable decline. “The EU is the only major steelmaking region seeing a decrease in capacity,” the plan warns.

The bloc’s rude awakening in the first months of Donald Trump’s second term as U.S. President means all the issues Europe faces have been dialed up to twelve. | Chip Somodevilla/Getty Images

In the long term, Brussels hopes that focusing on producing low-carbon steel with cheaper locally produced renewable energy, hydrogen, and locally recycled scrap will give the industry an edge against its competitors.  

Unprecedented steps

If the defense industry and employment figures are the ‘why,’ the ‘how’ is more complicated. 

The plan includes measures in the fields of energy, trade and sustainability. Perhaps most pressing, the Commission promises it will find a way to replicate safeguard measures intended to keep shielding the steel sector from imports shut out of the U.S. by Trump’s new tariffs.

Safeguards can legally only last for eight years, so replacing them will require some legal creativity on the part of the Commission. The Steel Action Plan promises a proposal in the third quarter.

The Commission also promises “to proactively open investigations based on a “threat of injury.” That is eurospeak for opening trade probes into dumping or subsidies like the now-famous case on Chinese electric vehicles. Using the legal term “threat of injury” means the EU doesn’t have to wait until an industry is already feeling the pressure.

As an umbrella measure, steel and aluminum might soon be classified based on where they were originally “melted and poured,” not in which country they got altered after that. This would allow the EU to tackle circumvention of existing duties on imports.

“Is it enough? History will tell,” a Commission official said, after being granted anonymity to discuss the plan candidly. 

“But if we would have promised this a few years ago, no one would have believed it,” they said, referring to the Commission considering restrictions on scrap metal exports, tracking where steel is originally melted and poured, and erecting safeguards for aluminum. Those last two points are completely new measures.

Green and secure

Brussels also gave the most steel-friendly nod yet about upcoming changes to the EU’s carbon-border tax known as CBAM, which places a levy on certain imports from countries without an equivalent carbon price.

The Commission promised to expand the carbon tax to also cover specific products made from steel and aluminum — not just the basic metals. That would close what industry groups say is a loophole firms exploit to evade taxes.

Early reaction from industry was positive. “We are grateful that the Commission has clearly recognized the strategic importance of the European steel industry to the EU’s sovereignty, security, and competitiveness,” said Henrik Adam, president of steelmakers’ association Eurofer.

Europe’s top aluminum lobbyist Paul Voss on Tuesday noted “a completely new, different and better dynamic of exchange with the European Commission,” adding: “Now we need actual deliverables.”

Brussels hopes that focusing on producing low-carbon steel with cheaper locally produced renewable energy, hydrogen, and locally recycled scrap will give the industry an edge against its competitors.  | Joseph Prezioso/Getty Images

Green groups, meanwhile, welcomed the emphasis on helping heavy industries go green. “This is good news: Accelerating the decarbonization of the steel sector presents the best bet to securing a long-term future for the sector in Europe,” said Johanna Lehne, associate director for clean economy at climate think tank E3G.

“We need to see much more concerted industrial policy driving the transition at pace: scaling first-generation near-zero emission pilots, growing demand through lead markets and securing low-cost abundant renewable electricity for the sector,” she added.