Maintaining Basic Industries in Europe: Low-Carbon Pilot Markets, an Urgent Priority!
[Reference documents : response to the IDAA consultation / detailed proposal for a lead market regarding steel in cars / EU coalition letter for the creation of a lead market on steel in cars]
Between the slow decline of its industry and the transition towards a carbon-neutral, less fossil-fuel-dependent industrial model, the European Union stands at a crossroads.
To commit to the latter path and reconcile climate imperatives with competitiveness, it must take into account: the weaponization of trade policies by China and the United States; our dependence on fossil resources in an uncertain geopolitical context; and the lack of competitiveness of low-carbon products compared to their carbon-intensive counterparts. In parallel, it is crucial to consider the purchasing power challenges faced by European citizens and the inability of states to shoulder alone the financial burden of transforming our industrial and energy systems.
In this context, France Hydrogène believes that the key to maintaining a core base of upstream industries (such as steelmaking and basic chemicals) essential to our sovereignty lies in the creation of low-carbon pilot markets. In concrete terms, this means requiring certain downstream sectors of the steel and chemical industries to use low-carbon products—or face penalties if they fail to comply. These sectors must meet two main criteria:
- They must be capable of passing on the additional decarbonization costs to their final product in a way that remains socially acceptable. For example, using low-carbon steel to manufacture a car would lead to a cost increase of less than 1%.
- They must represent a sufficiently large market so that their regulation drives investment in transforming upstream industries. For example, the automotive sector accounts for 17 to 20% of the demand for European steel.
Often perceived as new obligations on sectors already under strain (such as the automotive industry), these pilot markets—if well-designed—could actually preserve or even strengthen the competitiveness of European industries.
Low-carbon pilot markets have been a hot topic in Brussels for over a year. Yet, a first concrete opportunity was missed: despite calls from a steel sector in crisis, the Steel & Metals Action Plan includes no provision for a pilot market for primary low-carbon steel.
With the upcoming Industrial Decarbonisation Accelerator Act, expected from the European Commission in the last quarter of 2025, it is vital to move from rhetoric to the implementation of clear and large-scale measures. France Hydrogène shares its general recommendations for this European effort, with a focus on steel and fertilizers (FR/EN), as well as its detailed proposal on low-carbon steel quotas for the automotive industry (FR/EN).