In March 2025, European Union (EU) leaders convened to address the pressing challenges confronting the steel and metals industries. The meeting underscored a collective commitment to reforming these sectors amid escalating global competition and internal pressures.
EU’s Strategic Response to Global Challenges
The EU’s steel industry is grappling with significant obstacles, including high energy costs, unfair global competition, and the imperative to invest in reducing greenhouse gas emissions. To bolster the sector’s competitiveness and ensure its future viability, the European Commission unveiled a comprehensive Action Plan on Steel and Metals. This initiative aims to strengthen the industry’s resilience and safeguard its position in the global market. (luxembourg.representation.ec.europa.eu)
Key Components of the Action Plan
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Ensuring Affordable and Secure Energy Supply: Recognizing that energy expenses constitute a substantial portion of production costs, the plan promotes the use of Power Purchase Agreements (PPAs) and encourages member states to leverage energy tax flexibility and reduced network tariffs to mitigate electricity price volatility. Additionally, it advocates for expedited grid access for energy-intensive industries and supports the increased utilization of renewable and low-carbon hydrogen within the sectors. (luxembourg.representation.ec.europa.eu)
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Preventing Carbon Leakage: The Carbon Border Adjustment Mechanism (CBAM) is designed to ensure a level playing field by preventing non-EU industries from circumventing EU regulations. The Commission plans to issue a communication addressing carbon leakage for CBAM goods exported from the EU to third countries and will conduct a review of CBAM, with a legislative proposal by the end of 2025 to extend its scope to certain steel and aluminum-based downstream products and include additional anti-circumvention measures. (luxembourg.representation.ec.europa.eu)
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Expanding and Protecting European Industrial Capacities: In response to global overcapacity, the EU has implemented trade defense measures against unfair competition in steel, aluminum, and ferroalloys. The Commission is tightening current steel safeguards and will propose a new long-term measure before the end of the year to maintain effective protection of the EU’s steel sector once the current safeguard expires in mid-2026. To prevent exporters from bypassing trade defense measures, the Commission is also assessing the introduction of the "melted and poured rule" to determine the origin of metal goods. (luxembourg.representation.ec.europa.eu)
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Promoting Circularity: Improving recycling is crucial for reducing emissions and energy use in the metals industry. The Commission plans to set targets for recycled steel and aluminum in key sectors and assess whether more products, like construction materials and electronics, should have recycling or recycled content requirements. Additionally, the Commission will consider trade measures on metal scrap, a vital input for decarbonized steel, to ensure sufficient availability of scrap. (luxembourg.representation.ec.europa.eu)
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De-risking Decarbonization: The future Industrial Decarbonization Accelerator Act will introduce resilience and sustainability criteria for European products in public procurement to boost demand for EU-produced low-carbon metals, creating lead markets. The Commission will allocate €150 million through the Research Fund for Coal and Steel in 2026-27, with an additional €600 million via Horizon Europe devoted to the Clean Industrial Deal. At the scale-up stage, the Commission targets €100 billion through the Industrial Decarbonization Bank, drawing on the Innovation Fund and other sources, with a €1 billion pilot auction in 2025 focusing on decarbonizing and electrifying key industrial processes. (luxembourg.representation.ec.europa.eu)
- Protecting Quality Industrial Jobs: The steel and metals industry is vital to the EU economy, employing directly and indirectly nearly 2.6 million people. Active labor policies will support skills development and fair job transitions. The European Fair Transition Observatory and the Quality Jobs Roadmap, part of the Clean Industrial Deal, will oversee employment impacts, ensuring workers’ rights are protected. (luxembourg.representation.ec.europa.eu)
Global Context and Implications
The EU’s proactive measures come in response to external pressures, notably the United States’ imposition of a 25% tariff on all steel imports. This policy has intensified concerns about potential steel overcapacity flooding the European market, further challenging domestic producers already contending with high energy costs and competition from Asia. (reuters.com)
In light of these developments, the European Commission has initiated a review of the EU safeguard measure on steel, following a request by 13 EU member states. The review aims to provide temporary relief to domestic industry, helping it adapt to new market conditions and regain competitiveness. The Commission is conducting a detailed investigation until March 31, 2025, with any proposed changes requiring approval from EU member states. (policy.trade.ec.europa.eu)
Conclusion
The EU’s comprehensive Action Plan on Steel and Metals represents a concerted effort to address the multifaceted challenges facing the steel industry. By focusing on energy security, carbon leakage prevention, industrial capacity protection, circularity, decarbonization, and job protection, the EU aims to fortify its steel sector against global uncertainties and ensure its sustainable growth. The success of these initiatives will be pivotal in maintaining Europe’s industrial competitiveness and economic resilience in the face of evolving global dynamics.
EU Tightens Steel Import Restrictions Amid Global Trade Tensions:
- EU tightens steel import restrictions
- EU proposes cutting steel imports by 15% as Trump tariffs bite
- Italy, France and Slovakia demand changes to EU carbon border levy, document shows
What is the timeline for the EU’s new steel industry action plan?
Frequently Asked Questions (FAQ)
- What is the EU’s Action Plan on Steel and Metals?
- The European Commission’s Action Plan on Steel and Metals,unveiled in March 2025,is a comprehensive strategy aimed at enhancing the competitiveness and sustainability of the EU’s steel and metals industries. It addresses challenges such as high energy costs, unfair global competition, and the need for decarbonization. The plan includes measures to ensure affordable energy supply, prevent carbon leakage, protect industrial capacities, promote recycling, support decarbonization, and safeguard quality industrial jobs.
- How does the EU plan to ensure affordable and secure energy supply for the steel industry?
- the EU’s Action Plan promotes the use of Power Purchase Agreements (PPAs) and encourages member states to leverage energy tax adaptability and reduced network tariffs to mitigate electricity price volatility. It also advocates for expedited grid access for energy-intensive industries and supports the increased utilization of renewable and low-carbon hydrogen within the sectors.
- What is the Carbon Border Adjustment Mechanism (CBAM), and how does it relate to the steel industry?
- The CBAM is designed to prevent non-EU industries from circumventing EU regulations by imposing tariffs on imported goods based on their carbon content. The European Commission plans to review CBAM to extend its scope to certain steel and aluminum-based downstream products and include additional anti-circumvention measures, ensuring a level playing field for EU producers.
- What measures is the EU taking to protect its steel industry from global overcapacity?
- The EU has implemented trade defense measures against unfair competition in steel, aluminum, and ferroalloys. The Commission is tightening current steel safeguards and will propose a new long-term measure before the end of the year to maintain effective protection of the EU’s steel sector once the current safeguard expires in mid-2026. To prevent exporters from bypassing trade defense measures, the Commission is also assessing the introduction of the “melted and poured rule” to determine the origin of metal goods.
- How does the EU plan to promote recycling within the steel and metals industries?
- The Commission plans to set targets for recycled steel and aluminum in key sectors and assess whether more products, like construction materials and electronics, should have recycling or recycled content requirements. Additionally, the Commission will consider trade measures on metal scrap, a vital input for decarbonized steel, to ensure sufficient availability of scrap.
- What is the Industrial Decarbonization Accelerator Act, and how does it support the steel industry?
- The Industrial Decarbonization Accelerator Act will introduce resilience and sustainability criteria for European products in public procurement to boost demand for EU-produced low-carbon metals, creating lead markets. The Commission will allocate €150 million through the Research Fund for Coal and Steel in 2026-27, with an additional €600 million via Horizon Europe devoted to the Clean Industrial Deal. At the scale-up stage, the Commission targets €100 billion through the Industrial Decarbonization Bank, drawing on the Innovation fund and other sources, with a €1 billion pilot auction in 2025 focusing on decarbonizing and electrifying key industrial processes.
- How does the EU plan to protect quality industrial jobs in the steel and metals industries?
- The steel and metals industry is vital to the EU economy, employing directly and indirectly nearly 2.6 million people. Active labor policies will support skills development and fair job transitions. the European Fair Transition Observatory and the Quality jobs roadmap, part of the Clean Industrial Deal, will oversee employment impacts, ensuring workers’ rights are protected.
- What is the current status of the EU’s steel safeguard measure?
- The European Commission initiated a review of the EU safeguard measure on steel in December 2024, following a request by 13 EU member states. The review aims to provide temporary relief to the domestic industry, helping it adapt to new market conditions and regain competitiveness. The Commission is conducting a detailed investigation until March 31, 2025, with any proposed changes requiring approval from EU member states.
- How is the EU responding to the United States’ steel tariffs?
- In response to the U.S. imposition of a 25% tariff on all steel imports, the EU has proposed reducing steel import quotas by 15% to prevent an influx of cheap steel into the European market. This measure aims to protect the EU steel industry from potential overcapacity and maintain fair competition.
