The Warning: Rising Carbon Costs Could Shut European Mills

The three steelmakers represent roughly 60% of integrated steel production in Europe . Their joint analysis finds that under the current ETS trajectory, European steel production costs will rise by about €100 per tonne, making European steel uncompetitive against imports from regions with weaker carbon pricing . The companies warn that this escalating carbon bill risks plant closures, major job losses, and accelerated deindustrialization if the ETS trajectory is not adjusted . No specific number of projected job losses was cited in the available reporting, but the language is unambiguous: without reform, production will move outside the EU .

The Three Specific Reforms Industry is Demanding

The steelmakers’ letter to EU leaders outlines three concrete demands:

1. A temporary pause on rising ETS costs. The companies want the EU to cap the escalating CO₂ prices that companies must pay, at least until the necessary decarbonization infrastructure is in place .

2. A fundamental reform of the ETS system. The system needs a “reality check” to align carbon costs with the actual pace of available decarbonization technologies, rather than imposing costs faster than industry can adapt .

3. An end to the rapid phase-down of free carbon allowances. The steelmakers argue that the necessary infrastructure for green steel — green hydrogen, clean electricity, and carbon capture — is not yet available at commercial scale. Pulling free allowances too quickly, they say, will destroy Europe’s industrial base rather than decarbonize it .

Portugal’s environment minister, Maria da Graça Carvalho, sent a separate letter to Brussels on or around June 12–17, 2026, urging the Commission to reconsider or pause its recent decision to reduce free carbon allowances for industry. Her letter warned that the cuts would damage the competitiveness of key Portuguese sectors such as ceramics, glass, and cement . This mirrors the steelmakers’ call for a slower phase-out of free allocations, though Portugal’s letter focuses on broader industrial sectors rather than steel alone .

Political Context: Why July 15 is a Pivotal Date

The ETS revision comes at a moment of maximum policy flux for European steel. The EU’s steel safeguard measure — a tariff-based import protection — expires on June 30, 2026, with a new framework taking effect July 1 that cuts tariff-free import quotas by 47% and doubles out-of-quota duties to 50% . Simultaneously, the Commission is under a legally mandated deadline under Directive 2003/87/EC to report on ETS functioning by July 2026 .

Key milestones in the run-up to July 15 include:

• October 21, 2025 — The Commission announced the 2026 legislative update of the EU ETS in its work programme .
• May 11, 2026 — The Commission proposed updated ETS benchmark values for 2026–2030 and opened them for consultation .
• May 18, 2026 — The Commission held a high-level stakeholder roundtable, saying feedback would be used in preparing proposals “currently scheduled for 15 July” .
• June 10, 2026 — The Commission’s Orientation Debate on the ETS review took place; Executive Vice-President Raffaele Fitto confirmed work is proceeding toward the July 15 deadline .
• July 15, 2026 — The Commission is scheduled to table its formal ETS revision proposal, expected to include adjustments to the emissions reduction trajectory, updated benchmarks for free allocations, and potential modifications to the Market Stability Reserve .

A leaked Commission document from mid-June suggests Brussels intends to combine preservation of the CO₂ price signal with increased investment support for industry, including extending free allocations subject to decarbonization investments . However, the Commission has previously stated it has no plans to suspend the ETS . The push from both industrial giants and a member state (Portugal) creates significant pressure on the Commission to slow the pace of free allowance reductions.

The outcome of the July 15 revision will determine whether Europe’s steel industry can survive the transition — or whether the ETS accelerates the very deindustrialization it was designed to prevent.

The Warning: Rising Carbon Costs Could Shut European Mills

The three steelmakers represent roughly 60% of integrated steel production in Europe . Their joint analysis finds that under the current ETS trajectory, European steel production costs will rise by about €100 per tonne, making European steel uncompetitive against imports from regions with weaker carbon pricing . The companies warn that this escalating carbon bill risks plant closures, major job losses, and accelerated deindustrialization if the ETS trajectory is not adjusted . No specific number of projected job losses was cited in the available reporting, but the language is unambiguous: without reform, production will move outside the EU .

The Three Specific Reforms Industry is Demanding

The steelmakers’ letter to EU leaders outlines three concrete demands:

1. A temporary pause on rising ETS costs. The companies want the EU to cap the escalating CO₂ prices that companies must pay, at least until the necessary decarbonization infrastructure is in place .

2. A fundamental reform of the ETS system. The system needs a “reality check” to align carbon costs with the actual pace of available decarbonization technologies, rather than imposing costs faster than industry can adapt .

3. An end to the rapid phase-down of free carbon allowances. The steelmakers argue that the necessary infrastructure for green steel — green hydrogen, clean electricity, and carbon capture — is not yet available at commercial scale. Pulling free allowances too quickly, they say, will destroy Europe’s industrial base rather than decarbonize it .

Portugal’s environment minister, Maria da Graça Carvalho, sent a separate letter to Brussels on or around June 12–17, 2026, urging the Commission to reconsider or pause its recent decision to reduce free carbon allowances for industry. Her letter warned that the cuts would damage the competitiveness of key Portuguese sectors such as ceramics, glass, and cement . This mirrors the steelmakers’ call for a slower phase-out of free allocations, though Portugal’s letter focuses on broader industrial sectors rather than steel alone .

Political Context: Why July 15 is a Pivotal Date

The ETS revision comes at a moment of maximum policy flux for European steel. The EU’s steel safeguard measure — a tariff-based import protection — expires on June 30, 2026, with a new framework taking effect July 1 that cuts tariff-free import quotas by 47% and doubles out-of-quota duties to 50% . Simultaneously, the Commission is under a legally mandated deadline under Directive 2003/87/EC to report on ETS functioning by July 2026 .

Key milestones in the run-up to July 15 include:

• October 21, 2025 — The Commission announced the 2026 legislative update of the EU ETS in its work programme .
• May 11, 2026 — The Commission proposed updated ETS benchmark values for 2026–2030 and opened them for consultation .
• May 18, 2026 — The Commission held a high-level stakeholder roundtable, saying feedback would be used in preparing proposals “currently scheduled for 15 July” .
• June 10, 2026 — The Commission’s Orientation Debate on the ETS review took place; Executive Vice-President Raffaele Fitto confirmed work is proceeding toward the July 15 deadline .
• July 15, 2026 — The Commission is scheduled to table its formal ETS revision proposal, expected to include adjustments to the emissions reduction trajectory, updated benchmarks for free allocations, and potential modifications to the Market Stability Reserve .

A leaked Commission document from mid-June suggests Brussels intends to combine preservation of the CO₂ price signal with increased investment support for industry, including extending free allocations subject to decarbonization investments . However, the Commission has previously stated it has no plans to suspend the ETS . The push from both industrial giants and a member state (Portugal) creates significant pressure on the Commission to slow the pace of free allowance reductions.

The outcome of the July 15 revision will determine whether Europe’s steel industry can survive the transition — or whether the ETS accelerates the very deindustrialization it was designed to prevent.