Sustainable recycling, use of secondary raw materials and Just Transition in the European ferrous and nonferrous metal industry

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Ferrous and non-ferrous metals sectors represent an important part of the EU industrial ecosystem. Metals are broadly present in a variety of goods with both short and long terms use. Steel is one of Europe's essential strategic sectors and plays a vital role in providing products and services to a wide-range of Europe’s industrial ecosystems. The European steel sector employs 330,000 people directly and is responsible for up to 2.27 million indirect jobs: it is estimated that, for every person in the EU, there are currently about 12 tonnes of steel in use. The industry is established across Europe, with more than 500 production sites in 23 Member States.

The EU aims to be climate-neutral by 2050. The objective of an economy with net-zero greenhouse gas (GHG) emissions is at the heart of the European Green Deal and in line with the EU’s commitment to global climate action under the Paris Agreement.

While aiming to ensure this, significant effort needs to be put into simultaneously securing that such ambitious goals are not jeopardising the competitiveness, or even the sole existence of the European industry and its value-chains - thus putting at risk its employees and with its wide-ranging implications, also the entire European society.

The EU Industrial Strategy recognised that energy-intensive industries are indispensable to Europe’s economy and announced that the Commission would support clean steel breakthrough technologies leading to a zero-carbon steel making process. It also recalled the importance of creating new markets for climate-neutral and circular products such as steel.

Reaching the EU’s climate goals will in fact require a significant increase of mineral inputs. According to the International Energy Agency, we expect the six-fold increase in demand by 2050 compared to today’s situation. To achieve the goals, such a supply needs to be sustainable. Thus, rather than relying on primary raw materials, recycling in the EU should be enabled to the maximum extent possible.
 
The recent EU Green Deal (EGD) and the New Circular Economy Action Plan (CEAP) and the European Parliament resolution A9-0008/2021 on the same topic provided insights as to how the EU can achieve its goals towards circularity ambitions, resource efficiency and climate. In this regard, both the EGD and the CEAP particularly pointed to the importance of domestic processing of the EU generated waste - waste recycling.

The availability of secondary raw materials retrieved form waste is in fact fundamental for the EU to i. meet domestic demand, ii. become less reliant on virgin raw material inputs, iii. but also to ensure an effective transition towards a climate- neutral and truly circular economy.

As such, the EU Industrial Strategy, and the Critical Raw Materials Resilience, both point to the importance of the European recycling chain – from waste to new end-products- remaining and continuing to operate in Europe.  

The steel sector will indeed be a key contributor to Europe achieving its 2050 targets. Thanks to their unique properties, ferrous and non-ferrous metals can be recycled indefinitely. The strong recycling performance is widely recognized and long-lasting. Moreover, the business model of the industry is in fact circular by nature as the input of steel scrap is a necessary component for making new steel at any one of more than 500 steel plants in Europe. The more quality scrap that can be used in new steel production, the less raw materials and energy are needed and in turn, this reduces emissions. Steel, for instance, is circular by nature, as it recycles over and over again without loss of quality. Currently, of all steel packaging put on the market in Europe, 84% is being recycled into new steel products (2019).
Metals thus have the potential to fully close the loop provided that the scrap is not exported nor landfilled. Moreover, an effective collection and sorting of materials is yet another pre-requisite for availability, but also the quality of scrap in Europe and ultimately efficient and sustainable recycling.

Amid the current decarbonization efforts by the EU, the importance of the scrap availability, being part of low carbon transition, is set to rise. Thus, the success of Europe’s decarbonization efforts, as well as the attainment of a truly circular economy for the overall ferrous and non-ferrous metals sectors also depends on the sufficient input materials recovered from waste that feed the recycling process for producing new metals. The availability and quality are today limiting factor for a large use by the sectors. In this respect, the volumes exported to other parts of the word could easily be absorbed within the EU and it would contribute to increasing Europe’s resource autonomy by safeguarding resources which are on the EU’s Critical RawMaterials list or are used by EU strategic value chains.

Yet, the situation is currently still far from ideal. The EU continues to be a major exporter of waste to third countries.  For instance, in 2019, the EU exported about 36 million tons of waste. In fact, the majority of these waste streams end up in countries with environmental, labor, public health and safety requirements that are much lower than European standards, which eventually, apart from other impacts, results in much higher (GHG) emissions. In this context, the revision of the EU Waste Shipment Regulation (Regulation 1013/2006) that is currently under way is of a great significance.

The EU’s exports of waste metals and their wider products risk thus causing harm to the environment and health in developing world. Processing waste metals abroad that could have been processed in the EU under higher environmental standards and with lower CO2 emissions, is thus often not a sustainable option. The issue here is not only the availability, but also the quality of scrap that is of a significant importance, as it has been highlighted in the CEAP 2.0 report adopted by the European Parliament last February. Last but not least, the export of ferrous scrap for its recycling in the third countries instead of recycling in the EU, does not only imply substantial additional CO2 emissions.

In supporting the European Green Deal, European leaders committed that the necessary transition will come with a Just Transition. At the same time that the sector needs to green, it is also confronted with significant challenges such as stagnating demand (a state-of-play that could evolve given the steel needed to green the economy), international trade distortions and the current pandemic which has disrupted supply chains and impacted downstream sectors.

The adoption of the Just Transition Fund (JTF) in June 2021 marks a significant step forward. In the 2020 European Semester Country Reports, the Commission proposed the steel sector as one of the priorities of JTF support in six Member States. However, the JTF is too limited in scope and scale because resources are only part of the story. The link with a real toolbox to ensure that transitions are smooth for companies and individual workers is almost missing. Turning rhetoric into concrete plans and action for sectors, comes with an urgent need to accompany them and their workers during the transition to the decarbonization and digitalization of our economy and society.

The recently published Commission Staff Working Documents “For a resilient, innovative, sustainable and digital energy-intensive industries ecosystem: Scenarios for a transition pathway” and "Towards competitive and clean European steel" are useful starting points. This opinion therefore also be addressing how EU steel industry can maintain employment levels, create and establish a vocational and training system for the re-skilling and upskilling of the current workforce (and also become attractive for future workers) with the involvement of national and/or regional public educational schools and institutes.

The CCMI, thanks to its experience with the EU metal production sites and their communities, has all the competences to produce an opinion that can address the main aspects and needs of the sectors and give clear and useful recommendation to the European Institutions, the Member States and the Regional Governments in a framework of a productive and effective Social Dialogue between the Social Partners.