EU 'Steel and Metals Action Plan' to Be Released, Focusing on Energy Prices, CBAM Adjustments, and Trade Protection

According to EU Dynamics on the 17th, the forthcoming EU Steel and Metals Action Plan, set to be published this week, is expected to introduce measures in key areas such as reducing energy prices, addressing flaws in the EU Carbon Border Adjustment Mechanism (CBAM), and strengthening trade protection and market guidance. The plan remains in the revision phase, and its final content may be subject to changes.

Draft versions of the plan reviewed by EU Dynamics indicate that Europe's steel and copper production can largely meet domestic demand, whereas aluminum and nickel production fall significantly short. Currently, EU-based producers meet only 46% of aluminum demand and 25% of nickel demand.

"All these metals are critical to national defense," both drafts emphasize.

The draft states that the European Commission is negotiating with EU member states on a flexible clean energy support mechanism based on power purchase agreements and commitments to clean energy consumption.

Additionally, the draft calls for member states to fully utilize existing EU energy and state aid rules to reduce costs for energy-intensive industries. The Commission also plans to issue new guidance, including conditions for early investment in grid projects and potential measures to lower grid tariffs for the metals industry and other energy-intensive sectors - both of which are expected to be published in the second quarter of 2025.

Before these measures are implemented, the Commission also intends to facilitate the grid connection of electrification projects for energy-intensive industries and put forward relevant proposals.

However, the two drafts differ in their approach to extending government compensation for industrial electricity-related carbon costs. The first draft, initially published by German media Table Media, states that the EU Commission is committed to making this mechanism permanent after 2030. Meanwhile, the second draft, reviewed by EU Dynamics, is more ambiguous, merely stating that the Commission will ensure "appropriate measures are taken."

The draft also proposes several adjustments to the EU Carbon Border Adjustment Mechanism (CBAM). CBAM is a carbon pricing system applied to imported goods such as cement, steel, aluminum, fertilizers, electricity, and hydrogen, designed to create a level playing field between the EU and countries with less stringent climate policies.

The draft commits to presenting solutions to address the competitive disadvantages EU products face when exported to markets with weaker climate regulations. One version of the draft states that this solution will be introduced in the second quarter of this year in the form of a non-binding declaration, while the other version only acknowledges the issue without specifying further details.

Furthermore, the Commission plans to introduce anti-circumvention measures for CBAM and expand the mechanism to certain downstream products with high steel and aluminum content by the fourth quarter of this year.

The draft commits to introducing new trade defense instruments to shield the EU from global steel overcapacity, with related measures to be published no later than the third quarter of 2025.

The EU's current safeguard measures on low-cost steel imports are set to expire in June 2026, but the document stresses that "it is unrealistic to assume this issue will resolve itself by then."

Instead, the EU is prepared to utilize trade defense tools to protect its aluminum producers, who have been affected by U.S. tariffs. One draft version states that the Commission will launch a safeguard investigation into the aluminum industry, while another version suggests that the Commission is prepared to act immediately upon receiving sufficient evidence.

The draft also proposes a prompt investigation into ferroalloy industry safeguards and pledges initiatives to promote circular economy principles and cleaner metal applications. By leveraging lead markets, the EU aims to drive the widespread adoption of low-carbon metals.

"Lead markets, whether in the public or private sector, will guide the transition towards low-carbon metals as the industry standard," both drafts assert.