Metal industry group claims that new EU State Aid rules do not help

A metals industry group wrote a letter to the European Commission on Friday, saying that plans to overhaul state aid rules ignore heavy industry, which is critical for processing energy transition metals. They fail to mitigate energy costs, while green rules may penalise them.

After a public hearing on its proposal from February, the Commission will announce new rules for state aid on 26 June.

In a letter, Eurometaux stated that "while we are committed towards industrial decarbonisation, an overly-focused framework on this goal and failing to simultaneously and robustly address competitiveness of energy intensive industries would be a major error."

The group sent a letter to the Commission president Ursula von der Leyen, and the commissioners responsible for climate, energy, industry and competition this week.

Clean Industrial Deal, the Commission's initiative to revitalize Europe's struggling industries, is part of this new rule. The European industry has been hit hard by the spike in energy prices over the past few years, due to the loss Russian natural gas.

Prior to the energy crisis of 2021-2022, 40% of total operating costs was accounted for by energy in some smelters.

High costs are making the sector uncompetitive, at a moment when the EU is trying to reduce its dependence on third-country suppliers, such as China, of strategic materials that are key to the clean tech industry and grid infrastructure.

Chinese firms benefit from massive state subsidies and U.S. competitors from cheap gas.

The proposed framework does not include measures that would significantly improve the competitiveness of our sectors. 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 no current mechanisms to help electricity consumers switch from high-carbon sources of electricity to low-carbon ones.

Due to the location and daily variations, heavy industry is unable to fully benefit from the rising renewable energy production of the bloc. They are forced to use expensive fossil fuels.

The proposed rules may exclude companies from receiving state benefits due to indirect electricity emissions. The letter also calls on the Commission to help bring back idle capacity, such as the aluminium smelter of Slovalco in Slovakia.

In a letter, the group stated that "failure to take action will lead to an inevitable further loss of industrial capacity." (Reporting and editing by Hugh Lawson; Julia Payne)

(source: Reuters)