With the financial support of the European Commission

Impact on employment of CO2 reduction strategies in the steel industry by 2030

Conference « Jobs in a low carbon Europe »,  20 – 21 February 2007, Brussels

With the financial support of the European Commission

European steel industry in globalization

A drastic reduction of employment during last 30 years, in the western and eastern countries

An integration process with the new European members

Chinese steel production’ increase changes the future of the sector

The prices of raw materials increases further

Conference « Jobs in a low carbon Europe »,  20 – 21 February 2007, Brussels

With the financial support of the European Commission

Two routes : pig iron and scrap

By the pig iron route, T of steel = 2 T of CO2

By the scrap route : 1T of steel = 150 kg of C02

In the 90’s we assist in Europe at the conversion of former converters to electric furnaces feed by scrap

This evolution is now impossible (scraps are not available and too expansive)

Conference « Jobs in a low carbon Europe »,  20 – 21 February 2007, Brussels

With the financial support of the European Commission

CO2 : a new by-product for steel industry

An over allocation for European steel industry in 2005 with a series of different explanation

A profit for steel producers from a new by-product

CO2 integrate the financial equilibrium of steel production and become subject to trade-offs with the totality of production factors

Conference « Jobs in a low carbon Europe »,  20 – 21 February 2007, Brussels

With the financial support of the European Commission

A limited impact yet

A limited impact of the emissions rights on production cost

A factor of competitiveness between carbon restriction zone and non carbon restriction zone

No increase in R&D expenses except the ULCOS program

The link between investments in R&D and CO2 allocation does not exist for the moment

Conference « Jobs in a low carbon Europe »,  20 – 21 February 2007, Brussels

With the financial support of the European Commission

Emerging Investment strategies

Increase in production capacities are made by the pig iron route

They associate raw materials availability, slab production and export in developed countries

Somme risks of delocalization exist

Conference « Jobs in a low carbon Europe »,  20 – 21 February 2007, Brussels

With the financial support of the European Commission

Some potential of CO2 emission reduction does exist

These potentials are estimated between 25% and 35% and more in the case of pollutants steel industry

For European industry, it’s a strategic opportunity to invest in low carbon route

Conference « Jobs in a low carbon Europe »,  20 – 21 February 2007, Brussels

With the financial support of the European Commission

A crisis scenario

The scenario « business as usual » leads to a European steel industry which is weaker because of

More imports of low cost steels Low R&D expenses Increase of Insecure employment

The carbon constraint feeds and worsens downward employment movements in the sector at the quantitative level and strongly degrades their qualitative evolution

Conference « Jobs in a low carbon Europe »,  20 – 21 February 2007, Brussels

With the financial support of the European Commission

Quantifying job loss

The delocalization of 50 to 75 MT of slabs is possible by 2030, it represents 25 to 37% of European production( supposed at 200MT)

The job loss will be between 45 000 and 67 000 + 9000 to 13000 directs jobs sub contracted

Totally, between 80 000 and 120 000 jobs touched with one third by change of collective agreements

Conference « Jobs in a low carbon Europe »,  20 – 21 February 2007, Brussels

With the financial support of the European Commission

An alternative scenario: low carbon strategy

Decouple the level of production and carbon constraint by setting a standard for CO2 emissions by route based on the best techniques available

Sizing the reduction of emissions quotas allocated per installation with the rate of return on investment

Linking the allocation of emission rights to the producers to R&D efforts by establishing an equivalence between short term investment and those of long term

Conference « Jobs in a low carbon Europe »,  20 – 21 February 2007, Brussels

With the financial support of the European Commission

An innovating industrial policy

Introducing regulation on the imports of steel products which, through CO2 quality, allows the carbon cost to be rebalanced for all steel consumed in European union

Modifying the governance of the sector by reintroducing social partners and others interested parties into the steering of the carbon constraint

Make Clean development mechanism work for social and environmental sustainability

Conference « Jobs in a low carbon Europe »,  20 – 21 February 2007, Brussels

With the financial support of the European Commission

The job effect

The totality these measures does not allow employment in the iron and steel industry to be maintained at its current level because of the structural nature of certain changes in the sector such as the price of raw materials and the outsourcing of an increasing number of previously integral functions.

Under these conditions, it is estimated that 50,000 direct jobs, internal and outsourced, will be able to be saved (compared with the 80,000 threatened) in the European iron and steel industry, mainly in the West, because apart from the rebalancing applied to imports, steel production by low-carbon processes has become a competitive advantage for European producers.

Conference « Jobs in a low carbon Europe »,  20 – 21 February 2007, Brussels

With the financial support of the European Commission

CO2 emissions divided by 2 per ton of steel in 2030 is possible

Réduction d'émissions de CO2 de la sidérurgie européenne à l'horizon 2030

2005 2010 2015 2020 2025 2030

T de CO2 par T d'acier 2 1,8 1,6 1,4 1,2 1production européenne( MT) 120 120 120 120 120 120Tonnes de CO2 émises (MT) 240 216 192 168 144 120

-10,0% -20,0% -30,0% -40,0% -50,0%