Metal EII: Many shared characteristics

1. Fighting climate change and defending jobs in metal energy intensive industries: pushing for innovation and investmentETUI, Brussels29 March 2011

2. High capital and energy intensity (massive long-term investments) Intensifying global competition Emerging economies (BRICs) Dependence on the international markets for raw materials (end of longer term contracts/spot prices) High prices of scrap and electricity Impact of the economic crisis – production increasing back towards pre-crisis levels but employment falling (precarious work increasing) Part of the problem and the solution: Importance of innovation and quality Metal EII: Many shared characteristics

3. Metal production: the industrial backbone Finished Product Raw Materials 1st Processors Steel Production Trade Iron Ore Automotive Coke • Processors Machinery Scrap Electricity Steel Mills Components Equipment

5. Even if increased prices are relatively modest, EU producers have comparative disadvantage (ETUC/Syndex 2007): High risk of replacing low-carbon-intensity ‘cleaner’ metals produced in Europe with higher-carbon-intensity metals in countries without emissions restrictions in place Direct consequence for employment in Europe and emissions worldwide Sectors at a high risk of carbon leakage

7. Energy intensive industries:Steel

8. Steel • Employment (420,000 direct) - no excess capacity anymore after decades of restructuring + the current crisis • 30% of steel products offered today didn’t exist 10 years ago: surface treatment, alloys, lightweight steel solutions, special steels (e.g. for wind mills), sustainable steel construction (longer life-time of buildings, better energy performance) • Over past 40 years, CO2 and energy consumption decreased by 50% and 60% respectively • Almost all the steel of cars is recycled (by 2015 95% of all car materials must be completely recycled)

9. Production increasing but recovery still fragile

10. Close relationship between steel production process and production of CO2 (30% total industrial emissions): Pig-iron process (60% of European steel production): each tonne of steel produces about 2 tonnes of CO2 Electric process (40% of European steel production): each tonne of steel produces about 150kg of CO2 Chemical and physical laws are limiting the reduction potential, although increased energy efficiency still has role to play (especially considering the cost of CCS) EMF is heavily involved in the promotion of new technologies reducing emissions – e.g. through ESTEP Steel and CO2 emissions

11. Importance of innovation and R&D for EII

12. Energy intensive industries:Non-ferrous metals

13. Non-ferrous: from base metals to new materials • 400.000 employees • Key in a sustainable production strategy, but energy intensive • closing the material loop • Technologicalsolutions in energy- and material-savings in transport, aeronautics, ICT, telecoms, construction • From base metals to newmaterials, special alloys, special coatings, nano-powderswhichcontribute to reduce the use of scarce resources • Sharp increase in secondary production (much better organisation of recycling, technological breakthroughs in recycling techniques): 60% of lead production, 65% of aluminium and 57% of refined copper, 58% of zinc, 36% of precious metals originate from scrap metals

14. Impact of China

15. Importance of energy prices: energy source

16. EU raw materials strategy should ensure that no escaping to ‘carbon havens’ outside Europe: e.g. copper recycling Traditional recycling methods Modern recycling technology Kayser Recycling System (KRS) Recycling electronic waste from the EU 27

17. Tackling carbon leakage in the ETS 3rd phase Link to carbon leakage decision: • In terms of allocation rules, two categories of operators: • 100% of the benchmark (carbon leakage sectors) or • 80% reduced to 30% in 2020 of the benchmark for sectors not exposed to risk of carbon leakage • Carbon leakage list was determined in December 2009: • 52 benchmarks for different products of 20 industrial sectors • Steel and non-ferrous metals sectors were included

18. Example of a product benchmark curve 18

19. Compensating for passed-on costs • Financial compensation for indirect emissions (higher electricity prices) possible through state aid for some electro-intensive carbon leakage sectors. COM to determine new state aid rules: adoption foreseen 2011/12 • EMF demanding immediate application: • a) sectoral scope (ensuring the coverage of non-ferrous and electric-arch steel recycling) • b) acceptance of interim compensation measures on passed-on CO2 costs before 2013. • c) any state aid must be tied to continuous improvement of environmental performance and the use of best available technology (BAT) to stimulate investment and innovation.

20. Sustainable manufacturing • Aim: -83 - -87% industrial emissions by 2050 • From end-of-pipe solutions to a focus on product lifecycles and integrated environmental strategies • Evolution to closed-loop, circular production systems and acceptance of environmental responsibilities throughout the value chain

21. Urgently need a European ‘Green’/Sustainable Industrial Policy Agenda based on private & public investment/funding Sectoral screening and clear transition plans R&D, demonstration and deployment Investment in energy infrastructure Regulation, standardisation and enforcement Creating an international sectoral level playing field to avoid carbon leakage: UNFCCC Ensuring a socially just transition to a low-carbon economy: ensuring training, quality employment and the anticipation of change with full worker participation Greening of all our workplaces European metalworkers on the road from Copenhagen to 2050