Dear President von der Leyen,

Dear Executive Vice-Presidents and Commissioners,

We, the undersigned representatives of the European circular steel value chain^[1], wish to express our serious concerns about the direction of current discussions on the methodology to label “green steel” and define lead markets in the European Union.

We fully support Europe’s climate ambitions for our sector. The European steel industry encompasses two distinct production routes: the coal-based primary blast-furnace-basic oxygen furnace (BF-BOF) route and the recycling-based electric arc furnace (EAF) route. The latter accounts for 45% of EU steel production for both carbon and stainless steel and is already electrified, circular and low-CO₂. It should be recognized, valued, and preserved as a key element of Europe’s climate, industrial, and resilience strategy.

Since coal-based primary production accounts for the vast majority of emissions in the steel industry, we also recognize the importance of stimulating demand for decarbonized primary iron. This, however, must be achieved without undermining Europe’s climate objectives or disadvantaging already low-CO₂, circular steel production.

European EAF steelmaking would not be adequately recognized if a sliding scale-based label were applied indiscriminately across all production routes, products, and markets. The challenges faced by coal-based primary producers and those faced by EAF recycling producers are structurally different and require distinct policy tools and performance indicators.

Sliding scale concepts were designed first and foremost by and for the primary coal-based route. While these approaches might be suitable to support the decarbonization of that technology, they make no sense, and would actually be counterproductive, when applied to the already highly-decarbonized EAF recycling route or to markets predominantly supplied by it.

Since the very premise of sliding scale concepts is to neutralize the climate benefits of recycled content in order to focus on primary input decarbonization, no adjustment or technical workaround could correct this misalignment^[2]. The allegedly “voluntary” nature of the proposed label would also not be sufficient to mitigate the harm that its endorsement by the Commission would cause if presented as the new normal for defining what is or is not sustainable in the steel industry.

We note that organizations developing this sliding scale labeling (IEA, Climate Club, OECD) consulted almost exclusively with primary producers, overlooking the specificities of mature, market-driven economies where EAF recycling is already well advanced. The very limited involvement of secondary-route actors in these initiatives and standards makes them unrepresentative of the EU steel recycling value chain – a perspective we wish to bring clearly to the Commission’s attention through this letter.

Despite recent comments from some Commission officials seemingly endorsing sliding scale concepts without distinguishing between steel production routes and segments, we find it difficult to believe that the European Commission would pursue such an unbalanced and discriminatory policy and not realize the dire consequences it would have for half of the EU steel industry and its value chain. Nor do we believe that the Commission would overlook the political and legal challenges such a course would inevitably face.

We therefore urge the Commission to recognize that a one-size-fits-all label would be counterproductive, creating inconsistencies and distortive effects such as the displacement of EU EAF steel production in favor of higher-emission primary imports – thereby jeopardizing Europe’s decarbonization while increasing its dependency on raw materials imports. A more balanced and targeted approach, aligned with existing policy frameworks and instruments that already rely on carbon-footprint methodologies linking circularity and decarbonization, would better drive demand for sustainable materials.

As European steel producers and recyclers committed to climate neutrality and circularity, we stand ready to contribute constructively to this process. Europe has built a world-leading low-CO₂ and circular steel system – one that should be strengthened, not disadvantaged, as we collectively pursue a climate-neutral future.

Sincerely,

The co-signatories

^[1] This statement is endorsed by Recycling Europe and in particular its ferrous recycling Branch – EFR – whose long standing position is to support a green steel labelling that genuinely incentivizes low-carbon and circular steel based on unrebuttable science-based methodologies. 

^[2] Additionally, focusing the proposed label solely on Scope 1 and 2 emissions would overlook the fact that Scope 3 emissions from ferroalloys and DRI-HBI often represent the majority of the total carbon footprint at the production stage, thus rendering a label overlooking Scope 3 emissions largely irrelevant and ineffective for both stainless and carbon steel.