European industry has to contend with costly decarbonisation while remaining competitive and ensuring business continuity, against a challenging backdrop of diverging attitudes between East and West. European deindustrialisation is taking place and needs to be tackled effectively, participants said at this week’s Industry in Transition conference in Katowice.

The EU’s climate ambition is admirable, but the bloc is missing a cohesive industrial policy that “connects the dots”, Eurofer director general Axel Eggert said at the event attended by Kallanish. The EU has so far only introduced “silo policies”, specific to each economic sector, he added, while the US Inflation Reduction Act was a “wakeup call” for the bloc.

European steelmakers are hampered by high energy prices and trade distortions by third countries, with access to clean electricity and clean hydrogen lacking. “We need an EU industrial policy that helps industry make it through the transition but also recognises that industry is a factor for the transition itself,” Eggert observed. Steel is a critical material for renewable industry development.

Deindustrialisation is however putting this under threat. The EU produced 126 million tonnes of crude steel in 2023 compared to almost 180mt in the early 2010s. “If we want to produce all the steel Europe needs, this trend needs to stop now,” Eggert warned.

European industry’s quest for autonomy will take time, pointed out Critical Raw Materials Alliance secretary general Maurits Bruggink. While ten years ago, the EU was looking just to secure raw materials supply for certain industries, the bloc now understands the importance of vertical integration and is thinking about a “mine to markets approach”, Bruggink noted.

However, the vast majority of the EU's 34 critical raw materials (CRMs) are imported and this will take some time to rectify, he added.

European Parliament Member and former Polish Prime Minister Jerzy Buzek, moderating the panel, asked if the EU will need to look to other CRM sources, such as Africa or Latin America, given increasing Chinese unreliability.

“The only way to be independent is by primary production in the EU,” Bruggink replied. Each supplier country has leverage they could potentially use against the bloc, even the US, which is a staunch ally and responsible for 90% of the EU’s beryllium imports, he added.

As for recycling, most CRMs, once used, cannot be recovered and recycled, meaning the EU should not focus solely on urban mining, but on primary production, Bruggink said. Ferrous scrap collection and processing is however critical and must be enhanced to improve scrap quality, Eggert added.

The EU’s Net-Zero Industry Act aims to prevent deindustrialisation, but “the process is very European” and the bureaucracy involved delays investment decisions, whereas in the US, decision-making is much quicker, complained Weglokoks chief executive Tomasz Slezak.

Asked if it is possible to decarbonise on the one hand and remain autonomous on the other, Bruggink stressed: “We’re trying too many things at the same time”. Europe will need to remain reliant on China for renewable energy components for a while, he suggested.

“Speed is of the essence. Implement what we have, quicker than everyone expects,” Eggert proclaimed. The EU needs renewables infrastructure rollout, a subsidised energy price to help industry transition, lead green steel markets for public projects, and to spend the circa €500 billion ($532 billion) Emissions Trading System revenue projected to 2030 on funding decarbonisation, he added.

Discussions also need to be had with banks about derisking financing for low-emission investments. Slezak agreed, concluding that investors need reduced risks to incentivise costly investments into the low-emission transition.