A strong Market Stability Reserve will not harm the European iron & steel sector

Lobbying is intense around the Market Stability Reserve proposal, the policy that can help fix the EU Emissions Trading Scheme. After failing to make any changes to the Commission proposal in the Industry Committee in January, some regressive business voices have been further raised in an attempt to scare politicians from reforming the carbon market.

Eurofer, the association of steel makers in Europe, and ArcelorMittal, its largest member, and the largest steel company in the world, have been lobbying MEPs with claims about the effects of the proposed Market Stability Reserve.

Sandbag has gone back to the data, and seen how these sometimes sensational claims stand up against the facts.

Visit our Claims vs Facts website here

Notable facts:

• The iron and steel sector as a whole will be in surplus until 2023.

• Eastern Europe iron and steel installations will be in surplus until at least 2040.

• ArcelorMittal’s iron and steel installations will not run out of free allowances before 2050!

• The impact of the MSR on energy prices is predicted to be very modest; far more important are fluctuations in the global price of fuels such as gas.

• Carbon leakage protections are currently set far above the market price of CO2, amounting to a hand-out of €39 billion between 2015-2019.

European industry should welcome a strong, early Market Stability Reserve, as a pragmatic response to the problems with the EU Emissions Trading Scheme. A functioning carbon market remains one of the most cost-effective methods to cut greenhouse gas emissions.

Please consult our online MSR tool to see how an early start to the MSR, as well as removing the backload and unallocated allowances, can tackle the vast surplus on the EU Emissions Trading Scheme.