By Antonis Kontoleontos, President of the Energy Industrial Consumers’ Union (EBIKEN)
The European Commission, with the “Fit for 55” package of policy proposals, proposes to take specific additional measures to reduce greenhouse gas emissions by at least 55% by 2030, compared to the 1990 emissions level, across all sectors of industry, transport, buildings and energy.
In the same context, one of the most important interventions proposed is the gradual reduction, from 2026 to 2035, which will lead to the total abolition of free CO2 rights (EUAs), available to date in specific industrial sectors such as cement, steel, aluminium and fertilisers (carbon leakage).
The subsequent increase in demand on the European stock exchange by industries for EUA after the removal of the freebies will result in a gradual increase in their prices. We clarify that in third countries there is no obligation on the part of the respective industries to pay an environmental tax on their emissions.
From the above, we understand that from 2026 onwards there will be a gradual significant increase in the production costs of various industrial products. This increase will obviously have a significant negative impact on the international competitiveness of European industry and will inevitably be passed on to European consumers.
There has already been an increase in imports from third countries in recent years of the above-mentioned industrial products, due to the increase in energy costs faced by European industries compared to other large countries such as China, India and America.
We believe that the above-mentioned measure aims to bring significant revenues of 10 billion euros to the European Commission’s coffers, which will be used to finance the investments needed to decarbonise European industry, ignoring the negative effects it will have on consumers and industry.
We usually mention investments such as the reduction of direct emissions in industries such as steelmaking (blast furnaces) by replacing coke with FA and hydrogen in a second phase, the sequestration of CO2 in cement plants and refineries (CCU) and the increase in the use of electricity (electrification) instead of FA.
It is therefore understood that many of the costs along the path to the green transition will be passed on indirectly to consumers, although it is doubtful when energy prices will fall.
In the same context, in order to “level” the playing field in EU markets, due to differences in climate policy followed by countries outside Europe, the European Commission proposes the implementation of a Carbon Border Adjustment Mechanism (CBAM), which will impose a surcharge on the corresponding imported industrial products, depending on their carbon footprint, but also on imported energy.
For our country, this means that electricity from lignite that will be produced in the Balkans and imported to Greece will become much more expensive.
In theory, of course, everything is easy. In practice, however, although European industry will be burdened by the above regulations for all its production, since it will not be reimbursed for the cost of the carbon it bears when exporting to third countries, its competitors will only be burdened for their exports to Europe, and this is provided that the new mechanism is not circumvented.
The question certainly arises as to whether it is possible to verify the accuracy of data on the carbon footprint of installations in third countries, since it will be very easy for importers to avoid imposing taxes by mixing resources.
It is also true that the implementation of the CBAM will negatively affect the competitiveness of products produced in the EU, which are further downstream in the value chains (downstream).
The negative effects for the Greek steel and cement industries due to the CBAM will be larger compared to their European counterparts, as the trade intensity index for steel in Greece is 52.7% compared to 25.3% in the EU and for cement 24.7% in Greece compared to 6.7% in the EU.
Unfortunately, the wrong choices along the path to ecological transition do not end there. Perhaps those who talk about “practical horses” are not mistaken.
It has been announced that in 2026 it will be decided whether to proceed with the removal of further state aid granted to eligible industries to offset the burden of indirect emission costs, which will represent a significant additional burden for the metalworking industries.
Decarbonizing industry requires high-cost investments based on new, immature technologies such as CO2 capture or the production of blue or green hydrogen, but ultimately there is no guarantee that these industries will remain internationally competitive.
It is also not certain that the raw materials needed for the green transition have been secured, such as as an intermediate fuel in steel mills, but also for the production of hydrogen.
Unfortunately, we fear that decisions to accelerate the course of the green transition will be influenced by geopolitical developments to such an extent that they will lead to minimising the negative effects on the competitiveness of energy-intensive European industries.
In particular, referring to our country, it would be a wrong impression that the industry is against increasing the penetration of renewable energy sources (RES). On the contrary, we are convinced that RES are the only solution to reduce the energy costs of the national industry in its effort to become independent from the oligopolies that control the operation of conventional units and prices on the wholesale market.
By concluding long-term power generation agreements (PPA) with RES producers, the national industry can contribute to the implementation of new RES units with a capacity of 4,000 MW, guaranteeing the necessary loans.
However, the rapid penetration of RES, and especially photovoltaic energy, without being accompanied by storage of the corresponding size, results in the cannibalization of prices on wholesale markets for many hours in off-peak months. This will result in an additional cost for the buyer, which occurs when the production curve of a PV adapts to the load curve of an industry (shaping cost).
The government should pressure the European Commission to move forward with the approval of a mechanism to subsidize part of this cost (Green pool), whose approval has been pending for three years.
In addition, the recent crisis has proven wrong those who argue that the rapid development of photovoltaic energy in our country and the resulting excess production will be exported. Unfortunately, we note that exports were only possible at sunset, so until storage is developed, which is currently at a high cost, the excess photovoltaic production will not be able to be utilized.
It is also clear that for the country’s industry, in its effort to compensate for the sharp and frequent fluctuations in electricity prices in the wholesale market, concluding long-term PPAs with photovoltaic energy without storage is not a solution.
In conclusion, we fail to understand the reasons that led the Commission to impose such stringent targets to achieve the decarbonisation of the entire economy in such a short period of time. Because it is clear that Europe alone cannot save the planet when developing countries do not follow the same policy.
We hope that European policy will change, despite the re-election of the same Commission President, under pressure from society.