Empowering the European Galvanizing Industry to Support Sustainable Growth

EGGA-Galvanizing Europe supports key EU policy goals, including achieving net-zero emissions, advancing the circular economy and providing services and materials for affordable housing and infrastructure. Addressing the challenges of small and medium-sized enterprises (SMEs) and the whole manufacturing value chain is essential to ensuring Europe’s industrial leadership. 

Here are our industry’s recommendations to EU policymakers for the Clean Industrial Deal.

Recommendations

Global competitiveness pressures, regulatory burdens and barriers to the energy transition challenge the industry and its customers. Concrete measures must be taken for the European Galvanizing Industry to maintain its capability to provide durable and circular solutions for Europe’s manufacturing sector. Therefore, the Clean Industrial Deal and Action Plan for Affordable Energy should comprehensively cover the entire value chain and consider the following recommendations:

1. Net Zero Industry Act: Recognize steel mounting structures as an essential part of solar PV installations

The galvanizing industry supports renewable energy projects by providing durability for solar PV, wind energy structures and electricity distribution networks integral to achieving EU climate goals. The Net Zero Industry Act (NZIA) is the correct legislative instrument, particularly because of its commitment to the whole net zero supply chain.  

To ensure that the EU maintains its manufacturing base in the design and supply of solar mounting structures, these components must be included in the list of components within the Delegated Act based on Article 46/7 of the NZIA and the related Implementing Acts. Their inclusion, alongside solar tracker systems, is vital to ensure these components are subject to the resilience protection and environmental sustainability criteria in public procurement and auctions intended by the NZIA. The resilience criteria that will be applied must also be effective in encouraging EU manufacturing for mounting structures and tracker systems.

2. Protecting Competitiveness and Promoting Cleaner Technology: Reshaping ETS2

Extending the Emission Trading System (ETS) to additional sectors such as galvanizing industry and its customers leads to rising CO₂ costs when the path to decarbonisation requires further measures and support. If there are no measures to keep the affected sectors competitive, companies will not have the possibility to invest in decarbonisation measures and will potentially risk reducing production and relocate outside the EU if ETS2 carbon pricing is not stable and proportionate. In evaluating options for further development of ETS2, we recommend:

• A mandatory allocation of ETS2 revenues to sectors impacted by ETS2, such as galvanizing, is required for investment in decarbonisation and we support the concept of an ‘Electrification Bank ’ a financial instrument to facilitate the transition to renewable energy, e.g., through a fund provided by the European Investment Bank to facilitate the transition to renewable energy.  This should support electrification projects such as electrical furnaces for industrial processes, including galvanizing. 
• Redesign of the market stability mechanism that controls the number of permits to ensure a stable and proportionate carbon price within ETS2

Postponing the implementation of ETS2, to 2028 at earliest, would be necessary to allow time for these recommendations to be properly consulted, assessed and implemented.

3. Protecting Competitiveness and Promoting Cleaner Technology: Carbon Border Adjustment Mechanism

CBAM combined with the phase-out of free allocation under the EU Emissions Trading System, will have a negative impact on the competitiveness of Europe’s manufacturing industries that are served by the galvanizing industry. Our customers can be expected to experience considerable increase in the cost of steel inputs in addition to administrative burdens of CBAM implementation. They face competition from third country manufacturers of downstream products that can source steel at more competitive prices and export steel products, that are also galvanized in those third countries, into Europe. 

In the further development of CBAM, we recommend:

• To include downstream manufacturing sectors and key supply chain actors, such as EGGA-Galvanizing Europe, in the consultation and careful design of the extension of CBAM to downstream products. This consultation must go beyond the consultation with the existing ETS sectors to ensure competitiveness of the manufacturing sector is maintained.
• Extension of CBAM to downstream products should consider the associated extension of CBAM carbon assessments to industrial processes, e.g. batch galvanizing, in the scope of the assessments to ensure ancillary processes that presently outside the scope do not escape the balancing of carbon pricing. This may also require revisions to the approach to de minimus contributions to the overall assessment.

4. A Stable, Affordable and Clean Energy Supply

Increasing gas and electricity prices impact the competitiveness of the European galvanizing industry. Location and investment decisions also depend on energy prices and access to energy. Smaller industrial enterprises such as the galvanizing industry, that are highly energy-dependent but are not energy-intensive, must have access to stable and affordable low carbon energy supplies. 

5. Circular Economy: Promoting reuse and durability of materials in construction policy

The implementation of the new Construction Products Regulation and the policy development for the whole life carbon performance of buildings must recognise the key role of extended durability in reducing maintenance and facilitating reuse of construction products. More must be done to remove bureaucratic barriers to the reuse of steel construction products such as highway guard rails. We also propose changes to public procurement policies to prioritise materials with better lifecycle performance, including circularity, local sourcing, and carbon footprint reductions. 

6. SME Policy: Tailored Support for Smaller Industrial Enterprises

Europe’s smaller industrial enterprises, in particular SMEs, are increasingly overwhelmed with burdensome requirements arising from recently adopted EU legislation, such as the Corporate Sustainability Due Diligence Directive. This burden will be increased by implementation of the Construction Products Regulation (CPR) and CBAM assessments and reporting for manufacturers of steel products. 

We call on the Commission to reduce the regulatory burden arising from disproportionate and impractical EU legislation as a matter of priority to restore the competitiveness of Europe’s technology industries, enabling them to deliver the technological solutions that will drive the net-zero transformation. Consideration should be given to including the consequences of the implementation of the new CPR in the next phase of the ‘Omnibus’.