Press Release

Brussels, 17 December

Yesterday, the European Commission published several parts of the Automotive Package proposal, with far-reaching effects for the automotive industry’s decarbonisation path.

Notably, as of 2035, car manufacturers will be able to claim credits for the use of low-carbon steel made in Europe to manufacture their cars, contributing to up to 7% of the EU fleet wide emissions reduction target. Carbon neutral fuels can also be used, contributing with up to 3%.

This is a positive signal for the steel industry, which is making multi-billion investments to reduce the carbon footprint of their products to comply with ETS and CBAM, and can find now a clear market for their premium low-carbon steel. High quality primary low-carbon steel will be mostly done with clean hydrogen through DRI technologies.

This measure will increase demand for clean steel products, in line with the creation of clean lead markets that will boost clean European manufacturing and bring us closer to our resilience and climate goals.

Jorgo Chatzimarkakis, CEO of Hydrogen Europe commented: “Hydrogen Europe commends the Commission for proposing an automotive package that will give OEMs additional flexibility to choose their path to decarbonisation, all the while increasing demand for clean steel and thus enhancing the business case for renewable hydrogen. This is the first concrete step in the creation of true lead markets, and a move from 2035 to 2030 could further increase the commercial viability of clean steel”.

This proposal represents an added emphasis on Made in Europe and provides an additional compliance option for the industry to meet its climate obligations. The initiative could be improved by bringing forward the date by which OEMs can benefit from 2035 to at least 2030. In addition, if a similar measure were applied to the regulation on standards for Heavy Duty Vehicles (HDVs) in its upcoming revision, it would increase demand for clean steel even more. The proposal on corporate fleets, which sets binding targets for zero- and low-emission vehicles, does not include heavy duty vehicles.

To get the most out of this regulation, the EU must support the increase of clean steel production based on RFNBO and low-carbon hydrogen by basing the low-carbon steel definition on a sliding-scale methodology. We expect the Industrial accelerator Act planned in January to provide clear guidance on how to define low-carbon European steel.

For more info:

• European Commission press release: Commission takes action for clean and competitive automotive sector
• PwC report: Hydrogen lead markets framework study
• Hydrogen Europe paper: The case of Green Lead Markets: ensuring competitiveness, energy security and decarbonisation
• Hydrogen Europe paper: Scaling up hydrogen in road transport