On 19 March 2025, the European Commission introduced an action plan to secure a competitive and decarbonised steel and metals industry in Europe (“European Steel and Metals Action Plan”).
The plan recognises the significance and strategic importance of the sector, with the Commission placing an emphasis on metals such as steel and aluminium for Europe’s defence capability and acknowledging the resulting need for a stable and resilient supply chain for these critical resources. In addition, the Commission notes that the current economic context is making it more difficult for the European metals industry to invest in decarbonisation, with the consequence that the commercial and financial business case is not sufficient to attract investors and customers. The action plan is designed to prevent plant closures and further industry decline in order to avoid serious consequences for key economic regions across Europe as well as strategic sectors such as defence and aerospace. The action plan is accompanied by a transition pathway for the metal sectors which provides additional background and a bottom-up analysis of the needs and challenges in the industry and the views expressed by different stakeholders.
I. Current initiatives of the European Commission
The European Steel and Metals Action Plan is intended to complement the broader initiatives of the Clean Industrial Deal and the Action Plan for Affordable Energy and makes repeated reference to these initiatives. The action plan focuses on the key sector-specific issues preventing Europe’s metals industries from prospering and decarbonising.
The European Steel and Metals Action Plan also complements the “ReArm Europe Plan/Readiness 2030”, which was also presented by the Commission on 19 March 2025 and provides for specific legal and financial means to support defence investments in the EU. The Commission plans to mobilise up to EUR 800 billion for defence investments with the “ReArm Europe Plan/Readiness 2030”. A strong steel and metals industry is crucial for implementing the “ReArm Europe Plan/Readiness 2030”.
II. Main pillars of the European Steel and Metals Action Plan
The action plan is based on six main pillars:
1. Ensuring access to clean and affordable energy for the metals industries
Given that energy costs represent a large share of production costs in the sector, ensuring access to lower electricity prices is seen as crucial to supporting the transition. The European Steel and Metals Action Plan builds on the measures already presented in the Action Plan for Affordable Energy (making network charges more efficient, reducing energy taxes and levies, and facilitating power purchase agreements) while focusing on solutions targeting specifically the energy-intensive industries.
The Commission is consulting Member States on the Clean Industrial Deal State Aid Framework (CISAF) and will provide guidance to Member States on the design of public support schemes. Public support should pay particular attention to energy-intensive industries and the metals sectors.
In the short term, the plan calls on the Member States to make use of all the flexibilities provided by the European energy legislation and State aid rules to lower costs for energy-intensive industries. This applies in particular to the Climate, Energy and Environmental State Aid Guidelines (CEEAG), the Energy Taxation Directive (Directive 2003/96/EC) and the State Aid Guidelines for Emission Trading System. Member States’ possibilities to accelerate support to industrial decarbonisation will also become simpler and more flexible with the planned adoption of the Clean Industrial Deal State Aid Framework in the second quarter of 2025.
The Commission will address the problems underlying the long grid connection wait times.
Furthermore, hydrogen is regarded as a key enabler of decarbonisation since direct electrification is not always possible or cost-effective. In the Clean Industrial Deal, the Commission announced it would adopt the delegated act on low-carbon hydrogen which will present rules to achieve the desired greenhouse gas emission reduction goals. The Commission would also like to reprioritise the mandate of the European Clean Hydrogen Alliance towards sectors where hydrogen is most relevant for decarbonisation efforts.
The plan also seeks to develop and promote standardised approaches to waste heat recovery.
2. Preventing carbon leakage
The financial obligations of the Carbon Border Adjustment Mechanism (CBAM) will come into force in 2026. However, CBAM does not deal with the possible carbon leakage risks for metals produced in the EU that are subject to the EU ETS price and exported to third countries, where they must compete with metals from producers based in countries with lower climate ambitions. The Commission’s proposed solution to this problem is to extend CBAM to certain downstream products in order to prevent carbon leakage in CBAM-covered goods from shifting further downstream in the value chain. The Commission also wants to address concerns related to the circumvention of CBAM objectives and greenwashing.
3. Promoting and protecting European industrial capacities, in particular with trade defence instruments
According to the action plan, global overcapacities are threatening the profitability and competitiveness of European industries. The EU already has adopted several trade defence measures, but the industry still faces threats, in particular from the introduction by the US of import tariffs on steel and aluminium on 12 March 2025.
The Commission has made proposals to the Member States to adjust the steel safeguard measure to address the challenging situation faced by the EU steel sector. Given that the current safeguard measures will expire on 30 June 2026, but structural global overcapacities and their negative trade-related impact will not have disappeared by then, it is necessary to introduce protective measures that will be in effect beyond this date. Therefore, the Commission will propose a long-term measure providing a highly effective level of protection to the EU’s steel sector. It will also take any additional measures that may be considered necessary as a result of its current investigation regarding imports of certain alloying elements.
The situation is also deteriorating in the aluminium sector, with EU producers losing substantial market share. For this reason, the Commission has started to gather the relevant evidence regarding the use of trade defence instruments, including launching a safeguard measure investigation after a duly substantiated request is made. To ensure the effectiveness of the trade defence measures, the Commission will assess whether it should adapt its practice by introducing a “melted and poured rule”. Applying this rule would eliminate the possibility to change the origin of the metal product by performing minimal transformation and provide more certainty for tracing the origin of the product.
The Commission will strengthen the monitoring of trade flows and will open investigations based on threats of injury. In the context of the Clean Industrial Deal and the work towards sharpening existing trade defence instruments, the Commission will also assess whether the “lesser duty rule” regime requires changes. The Commission will also ensure the effective implementation of the sanctions on Russia and will impose further measures to address any circumvention. Moreover, the EU’s rules on chemicals (REACH) will be simplified.
4. Promoting circularity for metals
The plan aims to stimulate demand for scrap by increasing the use of scrap resources in the EU. To accomplish this, scrap should be better sorted and treated to ensure its usability in high-quality applications. This transition requires investments from recyclers and off-takers, as well as incentives at both the EU and national levels. The Commission will prepare the setting of targets for recycled steel and aluminium in key sectors in a cost-effective way. To this end, it would like to engage all relevant stakeholders in a dialogue to discuss recyclability and recycled content obligations as well as related issues. This is to form the basis for the Commission’s preparation of the Circular Economy Act planned for the fourth quarter of 2026. It will also support the implementation of the Ecodesign for Sustainable Products Regulation and other related frameworks.
The Circular Economy Act will further improve the functioning of secondary raw material markets and create a single market for waste. The Commission will also examine whether additional measures (e.g. export fees) are necessary to promote availability of scrap in the EU generated with high environmental and social standards and prevent potential “scrap leakage” to third countries with lower standards.
In addition, the role of standardisation is to be improved to facilitate the promotion of high-strength steel, the reuse of structural steel or the valorisation of steel by-products.
5. Defending quality industrial jobs
The action plan aims to uphold the high-skill quality jobs in the sector that provide decent pay, strong labour protections, and high health and safety standards, which are essential to sustaining the sector’s competitiveness and high social value. The Commission recently presented the Union of Skills, which aims to create skills for quality jobs, upskill and reskill the workforce as job requirements change, and circulate skills across the EU.
To ensure better support for workers affected by the transitions, the Commission plans to propose a targeted amendment to the European Globalisation Adjustment Fund Regulation in spring 2025 to extend the possibility of support to companies in restructuring processes to protect employees against the risk of unemployment. The Commission will also actively work with the Member States and sectoral partners to make better use of the opportunities offered by the European Social Fund Plus. Furthermore, the European Fair Transition Observatory and the Quality Jobs Roadmap announced in the Clean Industrial Deal will be instrumental in the transition.
6. De-risking decarbonisation projects through lead markets and public support
To minimise public support needs, it is considered essential that metals producers obtain a green premium. The Commission will propose as part of the Industrial Decarbonisation Accelerator Act the introduction of resilience and sustainability criteria to foster clean European supply for energy-intensive sectors. To enable the industries investing in decarbonisation to reap the “green premium”, the Industrial Decarbonisation Accelerator Act will develop a voluntary label on the carbon intensity of industrial products. The Commission also plans to implement comprehensive life-cycle assessments to improve the sustainability of products. The Ecodesign for Sustainable Products Regulation will complement the Industrial Decarbonisation Accelerator Act’s label by developing requirements for products with high steel content and add relevant environmental criteria beyond the carbon footprint.
To attract more private finance, additional public support will be required. At the innovation stage, the Research Fund for Coal and Steel (RFCS) (Decision 2008/376/EC) provides important funding for the steel sector. The Commission plans to launch flagship initiatives which would mobilise EUR 150 million in 2026 and 2027. It will also propose an overall reform of the RFCS. As announced in the Clean Industrial Deal, there will be a flagship Horizon Europe call of approx. EUR 600 million under the 2026-2027 work programme to support fit-for-deployment projects, including in the steel and metals industry.
As part of the Clean Industrial Deal, the Commission announced an Industrial Decarbonisation Bank aiming for EUR 100 billion in funding based on available funds in the Innovation Fund, additional revenues resulting from parts of the ETS as well as the revision of InvestEU. The Commission will launch a pilot auction with EUR 1 billion on the decarbonisation of key industrial processes across various sectors, including steel and metals, in 2025, supporting industrial decarbonisation and electrification with existing resources under the Innovation Fund. Funding conditions will be simplified in order to reduce the effort required to apply for public support.
As many steel alloying elements are at the same time critical raw materials, they benefit from the provisions of the Critical Raw Materials Act. The Commission will announce the first round of selected Strategic Projects in March 2025. The base metals sectors could also benefit from the demand/supply matchmaking aggregation platform that will be launched in 2025.
On 26 February 2025, the Commission adopted two new proposals for simplification measures that will cut red tape and simplify EU rules. Additional ones will be adopted this year.
III. Call for joint action to stakeholders
The Commission’s document presenting the European Steel and Metals Action Plan ends with a call for joint action. Close and intense interaction of all stakeholders is required. The Commission plans to monitor the situation in the sector, its resilience and ongoing decarbonisation. The implementation of the transition pathway for metals sectors will provide a constant space for dialogue between the industry, trade unions and other stakeholders. The mandate of the High-Level Group on Energy-intensive Industries will be renewed for another 4-year period to enable this implementation.
The plan states that the steel and metals sectors are indispensable to Europe’s industrial fabric, to its resilience, economic security, defence and social stability. The Commission calls on the European Parliament, the Council, and all relevant stakeholders to work together on the implementation of the action plan to ensure that they maintain and enhance production capacities in Europe and secure steady and reliable supply for key industries, including defence.
IV. Outlook
The European Steel and Metals Action Plan was devised to tackle the challenges posed by overcapacities in the steel sector, unfair trade practices, high energy costs and rising carbon costs. This is considered long overdue, especially as some companies in the sector are already fearing for their survival. For this reason, stakeholders are calling for the plan to be implemented quickly.
If it is implemented accordingly, companies will benefit from an improved market position and greater global competitiveness. The trade defence instruments have been particularly well received. Fair competition is impossible if steel that has been produced under conditions no longer permitted in Europe continues to be imported without regulation.
Given that steel and metals are key materials for the manufacture of defence and security equipment, the plan is also particularly significant for this sector. By promoting innovation in metal and steel production, more efficient and sustainable materials can be used in the defence sector, thereby improving the security and efficiency of European defence systems in the long term.
The Commission’s next steps under the European Steel and Metals Action Plan will focus on further developing policy, financial and regulatory measures to make the steel and metals industry in Europe more sustainable, innovative and competitive. This includes investing in green technologies, promoting research and development, creating sustainability standards and supporting partnerships to achieve these goals. This will open up great opportunities for companies aware of the funding mentioned above.
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