VIDEO: Energy costs and Europe’s steel industry

Steelmakers across Europe fear that rising electricity costs are making them uncompetitive, as demonstrated by the plight of the steel industry in Germany and the UK.

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In response, steelmakers in the UK have called on the government to support the industry, and in his March 21 budget, chancellor George Osborne introduced a three-pronged strategy aimed at cutting costs for the industry.

First, the carbon price floor support rate, which was due to rise on an annual basis, will be capped from 2016 until 2020.

Second, an existing compensation scheme for energy-intensive industries, which refunds the carbon emissions costs, will be extended.

The final stage will see support for higher renewable energy costs and the whole package has been welcomed by the UK steel industry.

Ironically, just as the UK steelmakers have reason to be cautiously optimistic, the German government’s support of the steel industry there, is currently under investigation by the European Competition Commission.

Draft legislation on reform of the German renewable energy act of 2012 (EEG) is due on April 8, with Sigmar Gabriel, minister for energy and economics, in talks with the European regulators to make sure the new law does not break state-aid rules, while at the same time keeping industry competitive.

In this video, Elfi Middelbeek explains what this might mean for Germany’s steelmakers.

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