Lakshmi Mittal, executive chairman of ArcelorMittal

Seven years ago, I called for a carbon border tax to level the playing field between European manufacturers bearing the burden of decarbonisation and cheaper imports that are not subject to such obligations. It may seem natural to feel good about the EU’s adoption of the carbon border adjustment mechanism, which is currently undergoing testing before its full implementation in January 2026.

But I am not here to declare success, but to sound the alarm. The carbon border adjustment mechanism in its current form suffers from clear shortcomings, and unless it is radically improved, Europe will fail to achieve its goal of combining decarbonisation with industrialisation.

The painful reality is that the European steel industry faces unprecedented challenges, weighed down by the costs of decarbonisation on the one hand, and the consequences of global overproduction, especially in China, on the other, which has led to a significant increase in imports.

Since the global financial crisis, steel production in Europe has fallen by a third and jobs have fallen by 25%. Demand has not recovered to pre-pandemic levels, which, combined with rising energy prices and increased imports, has contributed to a decline in profit margins to levels not seen in the industry since the pandemic.

The negative impact on profits comes at a time when the industry is expected to make final decisions on decarbonization projects, which require billions of euros in investments in technologies such as green hydrogen, which are still not economically viable.

Some might see this as a model for free trade, but I argue that trade here may be “free,” but it is also far from fair. This challenge is most evident when Europe is the only global market that bears the cost of carbon.

When Europe decided to lead the world in implementing climate policies – an ambitious and commendable goal – the expectation was that other countries would follow. But the lack of this step has led to a decline in Europe’s competitiveness in industrial sectors that depend on international trade, such as the steel industry.

The current situation is harmful to both Europe and the planet. The decline of the steel industry is not in line with the strategic priorities of the old continent, as set out in the “Clean Industrial Agreement” last July. Although this may help reduce European emissions, it will not benefit the planet, as the main steel industry will move to places where decarbonization is not a priority, and this is not a solution at all. It should not be this way. And

I am convinced that Europe can maintain an innovative and competitive steel industry, but it must decide: does it want to produce iron and steel on the continent? Or does it prefer to import it, coupled with the risks of a larger carbon footprint? This is a crucial question that requires an urgent answer.

If there is a sincere intention to support domestic industry, different policies must be coordinated to create a favorable environment that helps the European steel industry decarbonize and grow. The absence of such an environment is the reason why we recently announced that we are currently unable to make decisive investment decisions to convert blast furnaces to more sustainable technologies in terms of carbon emissions.

There are several challenges, the first of which is the urgent need to deal with imports, as measures must be taken to protect the European steel industry, similar to what is being done in the United States and Brazil, where the industry is a strategic element.

Emergency trade measures would be a strong first step towards addressing this issue. Second, we must ensure that the carbon border adjustment mechanism achieves its intended purpose. In this regard, Mario Draghi’s report on European competitiveness is an important document, as he stressed that the success of the mechanism is “in doubt” and highlighted a range of risks that the EU must manage to ensure that the goal is achieved.

The most prominent of these risks is the prevention of steel imports from countries that circumvent climate protection standards by exporting “clean” products to Europe, while keeping their high-emitting products for their domestic or non-European markets.

This issue is not as simple as it may seem, as it requires political solutions as much as technical solutions. With the new leadership in Brussels, and the development of initiatives such as the “Clean Industrial Agreement” and the Steel and Metals Action Plan, now is the time to act. The decisions that will be taken over the next twelve months will shape and shape the future of the European steel industry.

Any inaction will lead to a continued decline in the iron and steel sector within Europe. My message is simple and clear: Europe must not abandon its industrial heritage to other regions seeking to dominate the future of industrial growth.

There is huge investment in the transition to a green economy, waiting only for policy clarity to take off. If the right decisions are taken, Europe can be at the forefront of technological innovation for the next 50 years. Don’t miss this great opportunity.