13 Action Plan for the steel industry
| (35055)
10900/13
COM(13) 407
| Commission Communication: Action Plan for competitive and sustainable steel industry in Europe
|
| Legal base | —
|
| Document originated | 11 June 2013
|
| Deposited in Parliament | 18 June 2013
|
| Department | Business, Innovation and Skills
|
| Basis of consideration | EM of 1 July 2013
|
| Previous Committee Report | None
|
| To be discussed in Council | No date set
|
| Committee's assessment | Politically important
|
| Committee's decision | Cleared
|
Background
13.1 As the EU is the second largest steel producer in the
world, and steel is closely linked to many downstream sectors,
the Commission says that a strong and competitive sector is important
for Europe's industrial base. However, it notes that the sector
currently finds itself in a very difficult situation, as it faces
both a declining domestic demand as a result of the economic crisis,
overcapacity in a globalised steel market, and high energy prices.
It has therefore sought in this Communication to set out a targeted
Action Plan, as part of the follow up to its 2012 Communication
on Industrial Policy.[43]
The current document
13.2 The Commission notes that steel is likely to remain the
key material of choice in construction and manufacturing, and
that the energy, housing and transport sectors will continue to
provide opportunities for innovative products, with there also
being an emphasis on increasing added value. It says that climate
policies and resource efficiency will be another important factor,
but will require higher up-front investment, with policies needing
to be implemented in a way which takes account of competitiveness.
The Action Plan then looks in turn at the regulatory framework,
boosting demand, the international context, energy and climate
related issues, innovation, and the social dimension.
REGULATORY FRAMEWORK
13.3 The Commission says that, although European legislation
is essential for sustainable development and the proper functioning
of the internal market, it must be effective, and it is therefore
determined to identify excessive burdens, inconsistencies and
gaps. It also notes the cumulative effect which various policies
can have on the capacity of business to innovate and take investment
decisions, and the consequent need for competitiveness proofing
and "fitness checks", as well as the need to address
regulatory concerns at Member State level.
13.4 The Commission says that it will:
- finalise a cumulative cost
assessment for the industry in 2013 to establish the overall regulatory
burden;
- assess the impact of new initiatives which are
likely to have a major influence on competitiveness;
- examine the potential of the steel construction
products mark (SustSteel) to boost the market share of European
sustainable steel construction products; and
- investigate, with the Member States, initiatives
against the illegal European market for steel products, including
VAT evasion.
It also invites Member States to improve sustainability
by introducing SustSteel.
BOOSTING DEMAND
13.5 The Commission notes that the excess world
steel capacity is such that, even if this remained constant, it
would take five to seven years for it to be matched by demand
at current rates of growth, and that demand within the EU depends
on the financial and economic status of a few key using industries,
such as the construction and automotive sectors. It says that
it will continue to promote those sectors through its "CARS
2020" and sustainable construction initiatives.
THE INTERNATIONAL DIMENSION
13.6 The Commission observes that, whilst the
EU is an open market, other producing countries use trade restrictions
or distortions to advantage their own industries, obliging the
EU to pursue a market access strategy in order to enforce international
commitments, and it notes the use by some countries of predatory
commercial behaviour in order to export excess production, which
it has addressed through its Trade Defence Instruments. It also
highlights two specific areas:
Access to raw materials
The Commission points out that steel depends on resources,
such as good quality iron ore, which are scarce in Europe, and
whose price has risen, placing additional emphasis on the recycling
of scrap. However, it says that this will require better functioning
secondary metals markets; product design which allows easier dismantling
and separation of steel components; and tackling the loss of raw
material through illegal exports of scrap. The Commission has
identified 14 critical raw materials, which are both economically
important and subject to a high risk of supply disruption, which
may be accentuated by low substitutability and low recycling rates
of the raw material itself.
Trade
The Commission notes the importance of trade, and
strongly supports its liberalisation under the World Trade Organisation,
adding that bilateral trade agreements are another key instrument.
It suggests that further rises in global production capacity are
likely to encourage subsidies and dumping, and points out that,
until the end of 2012, an automatic licence-based system provided
timely information on future steel imports. It says that, following
the expiry of that system, the EU will continue to monitor imports
closely by other means, and it adds that it is also important
that regulated markets for trading commodity derivatives are fair
and transparent.
13.7 More generally, the Commission says that
it will in the short term:
- take action within its comprehensive
trade strategy against unfair trade practices in the sector, provide
timely reports on the evolution of steel imports, and carry out
ex-ante impact assessments of envisaged Free Trade Agreements;
- monitor scrap markets, and, if necessary, take
non-discriminatory measures;
- put forward a legislative proposal on inspections
and control of waste shipments;
- consider the inclusion of coking coal within
the list of critical raw materials; and
- engage with the main non-EU producing countries
to produce an overview of the sector.
13.8 In the long term, it says that it will:
- pursue its trade liberalisation
agenda through the negotiation of Free Trade Agreements, in order
to eliminate or substantially reduce tariff and non-tariff barriers,
and ensure sustainable access to raw materials; and
- work to modernise the Trade Defence Instrument.
CLIMATE AND ENERGY-RELATED ISSUES
13.9 The Commission observes that the steel industry
is one of the largest sources of carbon dioxide emissions, that
energy represents 40% of the European industry's operational costs,
that it faces higher energy prices than most of its international
competitors, and that it is under pressure as regards its two
main energy sources (electricity and coking coal). It also points
out that internationally competitive prices and secure supply
are vital as they determine future location and investment decisions,
and it notes in this respect the importance of reducing the cost
of renewables, the challenge presented by the rise in electricity
prices arising from the Emissions Trading Scheme, the need to
complete the internal energy market, and the need for long-term
electricity contracts so as to increase price predictability and
limit investment risks. It also suggests that some of the revenue
from auctioning emissions allowances under the ETS could help
fund climate related objectives, including the development of
new low-carbon technologies.
13.10 The Commission says that it will in the
short term:
- issue guidance on support schemes
used by Member States to meet their 2020 renewable energy targets;
- consider issuing a guidance letter on the competition
assessment of long-term electricity contracts;
- conduct an analysis of the composition and drivers
of energy prices on households, small and medium sized enterprises,
energy intensive industries and the EU's global competitiveness;
- assess the impact of the Emissions Trading System
on electricity prices in the EU;
- develop proposals for the EU's 2030 climate policy
framework, which fully consider cost-efficiency and potential
impacts on industry's costs;
- ensure that its assessment of the risk of carbon
leakage takes into account the specific features of certain industries
and the impact of electricity prices on their competitiveness;
- promote best practice in energy efficiency;
- promote energy efficiency investments;
- consider eco-design requirements for recyclability
and dismantling to ensure easier separation of steel from relevant
products;
- integrate the steel industry in research, development
and innovation, demonstration, deployment and market uptake measures
for energy efficient products and technologies; and
- assess how revenues related to the Emissions
Trading System can be earmarked and used to finance climate-related
objectives.
13.11 In the medium to longer term, it says that
it will:
- seek to negotiate by 2015 a
binding international agreement on climate change with adequate
commitments from all major economies;
- finalise standards for assessing greenhouse gas
emissions in energy-intensive industries;
- continue to develop the Life Cycle Approach (LCA)
methodology to allow better consideration of recyclability of
materials;
- assess the LCA evaluation along value chains
and integrate recyclability into relevant policy proposals; and
- encourage the exploitation of both conventional
and unconventional indigenous gas fossil fuel resources so as
to contribute to a reduction in the EU's energy import dependence
and prices.
13.12 It also invites Member States to assess
the impact on energy intensive industries of national measures,
such as taxation, capacity and network levies, tariffs and renewable
support mechanisms; to consider appropriate measures to reduce
the price of energy for those industries; to consider earmarking
revenues from the Emissions Trading System for relevant research
projects; to step up efforts to reduce the gap of average energy
prices and costs between the EU industry and its main competitors;
to assess initiatives related to pooled energy generation, long-term
contracts and partnerships; and to encourage best practice and
share information.
INNOVATION
13.13 The Commission says that most modern installations
in the EU steel industry are close to the limits of what modern
technology can achieve, and that the industry will struggle to
achieve further significant reductions in greenhouse gas emissions
without the introduction of breakthrough technologies, which are
several years away. It notes that carbon capture and storage has
been identified as a key technology for decarbonisation, but that
it is also clear that an industrial scale demonstration project
of producing steel using that technology will be required, and
that the likely cost of this will fall beyond the normal research,
development and innovation envelope, requiring the leveraging
of other instruments. A further consideration is whether the broad-scale
deployment of carbon capture and storage in the EU is possible
at competitive costs, and would receive public acceptance. The
Commission also points out that the EU industry is constantly
developing new types of steel, with the European Innovation Partnership
on Raw Materials fostering innovation.
13.14 The Commission says that it will:
- on energy intensive industries
consider support, in the context of Horizon 2020 and in accordance
with applicable state aid rules, for research and development,
and demonstration and pilot projects for new cleaner, and more
resource- and energy-efficient technologies;
- cooperate internationally in upstream research
projects which increase European competitiveness and market access;
- focus financial support more on the up-scaling
and piloting phase; and
- explore, in the context of the European Innovation
Partnership on Raw Materials, all the options to foster innovation
in the steel industry.
13.15 In addition, the Commission invites Member
States to explore the necessity and viability of earmarking funding
resources to establish specific funding of research, development
and innovation projects in the steel sector, whilst it also invites
the European Investment Bank to consider long-term financing applications
for steel projects which contribute to achieving compliance with
the requirements of the Industrial Emissions Directive based on
Best Available Technologies.
THE SOCIAL DIMENSION
13.16 The Commission says that the employment
outlook for the steel sector is a serious concern, and merits
full political attention, with Member States continuing to face
substantial social challenges. In view of this, it says that
urgent long-term and temporary measures need to be taken in order
to retain labour capacity and skills, and that various EU funds
and instruments can be mobilised.
13.17 The Commission says that it will in the
short term:
- promote the employment of young
people in the sector through the reinforcement of apprenticeship
schemes and youth-oriented recruitment processes;
- encourage the creation of a European Skills Council
for the steel industry;
- support Sector Skills Alliances to design and
deliver joint curricula and methods which provide learners with
the skills required by the labour market;
- support active training and life-long learning
policies in relation to energy savings skills;
- launch an inter-service task force to follow
up the main cases of steel plant closures or significant downsizing,
and to streamline the use of relevant EU funds in such cases;
- present a Quality Framework for anticipation
of change and restructuring; and
- ensure that the granting of EU funds takes into
account the durability of investment in creating and maintaining
jobs.
13.18 In addition, it invites Member States to
explore the European Social Fund for retraining and re-skilling;
to explore using the structural funds to alleviate the social
impacts of restructuring in the steel sector; to conclude the
ongoing negotiations on the European Globalisation Adjustment
Fund for the period 2014-20; and to facilitate dialogue between
social partners on initiatives to maintain jobs, such as labour
flexibility schemes. It also invites industry to actively remedy
skills gaps and shortages; to continue its adaptation, with social
dialogue and proper involvement of stakeholders; to examine restructuring
needs and possible capacity developments; and to cooperate with
other stakeholders to ensure that cyclical overcapacity is dealt
with through publicly supported temporary measures.
The Government's view
13.19 In his Explanatory Memorandum of 1 July
2013, the Minister for Business and Enterprise (Michael Fallon)
says the Government welcomes the Action Plan, and that, although
it is not binding on Member States and is couched in terms of
recommendations which they should consider, it nevertheless raises
some key concerns which the UK shares, for example the need to
establish a level playing field at an international level. The
Government will therefore work closely with the Commission and
other Member States as the recommendations are explored further.
13.20 The Minister says that the UK fully supports
a more sustainable future for the steel industry, and agrees that
innovation is important to the sector, which is a key part of
manufacturing supply chains. He also endorses any strengthening
of the Commission's capacity to address the cumulative impact
of regulation as the EU seeks to promote international competitiveness
and growth, adding that energy intensive industries like steel
remain a vital part of the European industrial base.
13.21 He supports the EU Emissions Trading System
as the best mechanism for delivering climate change objectives,
and strongly agrees that the post 2020 climate and energy framework
should provide the assurance and stability required by steel and
other energy intensive sectors. However, he is opposed to the
proposed earmarking of revenues from the System towards any specific
spend, believing that it is for individual Member States to decide
how to apportion their revenues.
13.22 The Minister notes that the Communication
raises issues around temporary working arrangements to retain
labour capacity, but he does not consider this to be a feasible,
cost effective or sustainable option, and he is also opposed to
any changes or relaxation in respect of Rescue & Restructuring
and Regional Aid for the steel sector, as it could lead to Member
States using public sector funding to support uncompetitive companies,
thereby undermining EU competitiveness. He also believes that
each Member State must adopt policies which best suit its own
economic, social security and employment frameworks, and decide
for itself how to deploy resources from the European Social Fund.
Conclusion
13.23 Although this is a wide-ranging Action
Plan, many of the remedies in it have a familiar ring from other
comparable documents, and those elements addressed to Member States
are not binding. Consequently, we do not feel that the Communication
raises any issues requiring further consideration, and we are
content to clear it, but, as the steel industry is clearly a sector
of some considerable importance, we think it right to draw the
document to the attention of the House.
43 (34341) 15168/12: see HC 86-xx (2012-13), chapter
15 (21 November 2012). Back
|
