ROME — The United States and the European Union announced today a deal to resume duty-free imports on steel and aluminum and negotiate a new global agreement that factors in the carbon content of imports and exports, inviting other world governments to join as well. The agreement establishes a “vital negotiating framework to address carbon emissions from hard-to-decarbonize industrial sectors on the path to a net-zero emissions planet,” said Lindsey Griffith, U.S. Federal Policy Director at Clean Air Task Force. “It’s also a welcome display of U.S.-EU leadership that establishes an encouraging spirit of diplomacy and collective climate action as we head into COP26.”
The industrial sector is responsible for one quarter of total global carbon emissions and is particularly challenging to decarbonize by electrification alone. Steel alone accounts for seven percent of energy-system emissions, according to the International Energy Agency (IEA), and requires carbon management and hydrogen technologies for decarbonization. Demand for these technologies is expected to increase through 2050, the year scientists have found the world must reach net-zero carbon emissions to have a chance at fending off the worst effects of climate change.
“Trade regimes that reflect the carbon content of products can help raise the bar for climate by providing incentives for reducing emissions along the product value chain,” said Alessia Virone, EU Government Affairs Manager at Clean Air Task Force. “However, governments must keep in mind the importance of deploying the technologies needed to decarbonize these industries, including decarbonized electricity, carbon capture and storage, and zero-carbon fuels like hydrogen.”
To meet the emissions standards in this new agreement, the U.S. and Europe will need to put in place ambitious innovation policies to advance the next generation of decarbonization technologies.
Both governments are in the process of hammering out climate-forward innovation policies to commercialize the technologies needed for industrial decarbonization.
In the U.S., the Build Back Better Act includes provisions such as direct grants, incentives for zero-carbon fuels, and a commercialization policy package for carbon management technologies — all of which will help the U.S. steel and aluminum industries achieve lower carbon content over time and improve U.S. competitiveness in a decarbonizing world.
In the EU, the Fit for 55 Package includes proposals to increase the funding available for innovative low-carbon technologies and create carbon contracts for differences as part of the effort to reform the bloc’s Emissions Trading System, along with relevant infrastructure policies. This will set the stage for EU members to further invest in technology innovation that will help decarbonize the industry and will need to be accompanied by national policies.
“The new transatlantic announcement is a welcome step in the right direction, and additional trade-intensive sectors will require similar efforts,” said Baxter Griffith and Virone. “We look forward to working with both the EU and the U.S. governments to forge rules for this new era in trade, while enacting domestic and international climate policies that advance the carbon-free technologies needed to decarbonize our global markets.”
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About Clean Air Task Force
Clean Air Task Force (CATF) is a non-profit organization working to safeguard against the worst impacts of climate change by catalyzing the rapid global development and deployment of low-carbon energy and other climate-protecting technologies. We work towards these objectives through research and analysis, public advocacy leadership, and partnership with the private sector. With nearly 25 years of nationally and internationally recognized expertise on clean air policy and regulations and a fierce commitment to fully exploring all potential solutions. CATF is headquartered in Boston, with staff working virtually around the U.S. and abroad.