Under this headline, the City of London’s daily Financial Times has put together an impressive report on how industry throughout Europe is hit by the energy crisis and is threatened with extinction. The FT piece is partly based on a report annexed to a letter sent by the European Round Table of Industry to the EU Commission, which shows the dramatic situation of European high-intensity energy sectors.
According to an annex in the Oct. 7 report: “European Industrial Competitiveness Facing an Existential Crisis”: “The ongoing crisis is only partly reflected in statistics, as companies are applying survival strategies, and foregoing long-term competitiveness. The real extent of the damage will be visible over the coming years. Yet, the situation is nowadays already very critical for:
“Aluminium: Production of 1 out of 4 Megaton in the EU/EEA has closed in less than a year (including 50% of capacity in the EU itself!), and the same capacity has started up outside of Europe…. Europe has now an import dependency of close to 50%. Recently, another European aluminum production capacity, namely the Slovalco aluminum plant in Slovakia, had to close.
“Steel: Many electro-based steel productions are under severe pressure from the high electricity prices. Aside from the shutdown of the Aperam facility in Genk, Belgium, ArcelorMittal has announced the temporary closure of 5 blast furnaces. Moreover, the only existing direct reduced iron (DRI) production plant in the EU, in Hamburg, is closed as well. ... Lately, many electric arc furnaces (EAFs) are on a stop-and-go modus. In addition, the prospect of the combined effects of the decreasing free allocation [of Carbon Certificates] and CBAM [Carbon Border Adjustment Mechanism] would entail that the EU-based production and jobs linked with exports will largely have to close. The steel market will shrink as not all downstream activities would be covered by CBAM . This could result in significant additional inflation due to increased steel prices. Furthermore, new market entrants from outside of the EU will sell their (carbon-intensive) steel on the EU market as CBAM could be circumvented or absorbed by many importers.