Metal industry group says new EU state aid rules fail to help

Reuters

a day ago

BRUSSELS, June 6 (Reuters) - European Commission plans to revamp state aid rules overlook heavy industry, critical to processing energy transition metals, as they fail to mitigate high energy costs while green rules could penalise them, a metals industry group said in a letter on Friday.
The Commission is due to announce new state aid rules on June 26 after a public consultation on its February proposal.
"While we are committed to industrial decarbonisation, a framework that is over-focused on this objective and fails to concurrently and robustly address the competitiveness of energy-intensive industries would be a critical error," industry group Eurometaux said in the letter.
The group sent the letter this week to Commission President Ursula von der Leyen and the commissioners in charge of climate, industry, energy and competition.
The new rules are part of the Commission's goal to revitalise Europe's flailing industries with its Clean Industrial Deal. The spike in energy costs over the last few years due to the loss of Russian natural gas has hit European industry hard.
The share of energy has risen to 60% of total operational costs for some smelters versus 40% prior to the 2021-2022 energy crisis.
The high costs make the sector increasingly uncompetitive at a time when the EU wants to reduce its over-dependence on third countries, namely China, for strategic materials key to clean tech and power grid infrastructure.
U.S. rivals benefit from cheap gas and Chinese firms from massive state aid across the supply chain.
"Measures substantially addressing our sectors' competitiveness are absent from the proposed framework. The adopted Clean Industry State Aid Framework must go beyond decarbonisation...allowing for immediate support to energy intensives, to cope with very high energy prices," the letter states.
"There are currently no mechanisms helping electricity consumers switch to consuming low-carbon electricity sources."
Heavy industry cannot fully take advantage of the bloc's rising renewable energy output due to location and daily variability, forcing them to rely on expensive fossil fuels.
The draft rules could exclude companies from state benefits owing to their indirect electricity emissions. Further, the letter calls for the Commission to support the return of idled capacity such as Slovalco's aluminium smelter in Slovakia.
"Failure to act will inevitably lead to a further loss of our industrial capacity," the group said in its letter.