Impact on employment of CO2 reduction strategies in the steel industry by 2030

1. Impact on employment of CO2 reduction strategies in the steel industry by 2030

2. European steel industry in globalization • A drastic reduction of employment during last 30 years, in the western and eastern countries • An integration process with the new European members • Chinese steel production’ increase changes the future of the sector • The prices of raw materials increases further

3. Two routes : pig iron and scrap • By the pig iron route, T of steel = 2 T of CO2 • By the scrap route : 1T of steel = 150 kg of C02 • In the 90’s we assist in Europe at the conversion of former converters to electric furnaces feed by scrap • This evolution is now impossible (scraps are not available and too expansive)

4. CO2 : a new by-product for steel industry • An over allocation for European steel industry in 2005 with a series of different explanation • A profit for steel producers from a new by-product • CO2 integrate the financial equilibrium of steel production and become subject to trade-offs with the totality of production factors

5. A limited impact yet • A limited impact of the emissions rights on production cost • A factor of competitiveness between carbon restriction zone and non carbon restriction zone • No increase in R&D expenses except the ULCOS program • The link between investments in R&D and CO2 allocationdoes not exist for the moment

6. Emerging Investment strategies • Increase in production capacities are made by the pig iron route • They associate raw materials availability, slab production and export in developed countries • Somme risks of delocalization exist

7. Some potential of CO2 emission reduction does exist • These potentials are estimated between 25% and 35% and more in the case of pollutants steel industry • For European industry, it’s a strategic opportunity to invest in low carbon route

8. A crisis scenario • The scenario « business as usual » leads to a European steel industry which is weaker because of • More imports of low cost steels • Low R&Dexpenses • Increase of Insecure employment • The carbon constraint feeds and worsens downward employment movements in the sector at the quantitative level and strongly degrades their qualitative evolution

9. Quantifying job loss • The delocalization of 50 to 75 MT of slabs is possible by 2030, it represents 25 to 37% of European production( supposed at 200MT) • The job loss will be between 45 000 and 67 000 + 9000 to 13000 directs jobs sub contracted • Totally, between 80 000 and 120 000 jobs touched with one third by change of collective agreements

10. An alternative scenario: low carbon strategy • Decouple the level of production and carbon constraint by setting a standard for CO2 emissions by route based on the best techniques available • Sizing the reduction of emissions quotas allocated per installation with the rate of return on investment • Linking the allocation of emission rightsto the producers to R&D efforts by establishing an equivalence between short term investment and those of long term

11. An innovating industrial policy • Introducing regulation on the imports of steel products which, through CO2 quality, allows the carbon cost to be rebalanced for all steel consumed in European union • Modifying the governance of the sector by reintroducing social partners and others interested parties into the steering of the carbon constraint • Make Clean development mechanism work forsocial and environmental sustainability

12. The job effect • The totality these measures does not allow employment in the iron and steel industry to be maintained at its current level because of the structural nature of certain changes in the sector such as the price of raw materials and the outsourcing of an increasing number of previously integral functions. • Under these conditions, it is estimated that 50,000 direct jobs, internal and outsourced, will be able to be saved (compared with the 80,000 threatened) in the European iron and steel industry, mainly in the West, because apart from the rebalancing applied to imports, steel production by low-carbon processes has become a competitive advantage for European producers.

13. CO2 emissions divided by 2 per ton of steel in 2030 is possible