UK Steel has today warned that
almost 23Mt of non-EU steel could flood the UK market, if the UK fails to
introduce its own Carbon Border Adjustment Mechanism (CBAM) at the same time as
the EU.
The steel trade association says that the UK Government must act
swiftly to avoid crushing the UK steel industry with an estimated 22.5Mt of
high-emission steel – which could devastate the UK – when the EU brings in new
import carbon costs in 2026.
The Government has today closed its consultation on a UK CBAM. UK
Steel’s new stats expose how 23Mt million tonnes (Mt) of steel currently
imported into the EU could be diverted from Europe and onto the UK market when
the EU’s CBAM is introduced, if there is no UK equivalent in place. The UK
consumes only 9Mt of steel, meaning any imported, cheap and high-emission steel
will be stacked in stock yards, undercutting local costs and devastating the
domestic industry.
The main aim of a CBAM policy is to create a market for
low-emission steel and help the industry decarbonise. Imported steel can
undercut domestic production simply because most nations do not apply the high
carbon costs to their steel industry.
The second blow would come from the restrictions to exports, as
75% of the UK steel industry’s exports totalling 2.55Mt of steel (£3.5bn in
value) goes to European markets. This could face a trade barrier from the
European CBAM from 2026, unless the UK moves forwards with its own UK CBAM.
By implementing its own CBAM, the UK removes a trade barrier to
the steel industry’s biggest market, stops the risk of trade diversion in its
tracks, and creates a market for low-carbon steel vital for UK plc’s Net Zero
transition, says UK Steel.
"By having a
competitive domestic steel industry, the UK can lead the way to Net Zero
steelmaking."
According to Gareth Stace,
director-general of UK Steel, “Over three times our annual steel consumption is
at risk of being diverted from the EU to open markets like the UK, which could
suffocate our domestic industry. By not acting now, the UK government will
burst the dam, when high-emission, cheap steel floods the UK market while
ruining our export opportunities at the same time.
“We need a UK Carbon Border Adjustment Mechanism to level the
playing field on carbon costs across local and international suppliers. By
having a competitive domestic steel industry, the UK can lead the way to Net
Zero steelmaking. Steel is vital to the UK’s economic resilience, jobs and
hitting Net Zero targets for the wider economy, and integral to green tech,
transport and future housing," he said.