\'Chasing seats in musical chairs\': EU wind sector raises concerns over steel import limits

'Chasing seats in musical chairs': EU wind sector raises concerns over steel import limits

Wind farm construction
Wind developers fear steel import restrictions will push up the cost of turbines

Europe's wind industry fears proposed limits on steel imports to the EU could jeopardise EU 2030 renewable energy targets

Proposed restrictions on steel imports to Europe have come under fire from wind energy developers, who warn the measures could jeopardise the EU's 2030 renewable energy goals by hampering offshore wind farm construction.

Trade body WindEurope said proposed steel limits slated for discussion in Brussels today could leave offshore wind developers struggling to source enough building materials to meet surging demand for wind farms, a situation it compared to "chasing seats in musical chairs".

Steel accounts for around half of the material used in wind turbine production, and wind developers expect their demand for the metal to increase by 36 per cent this year, largely to support the build out of offshore wind farms

But the European Commission has sought to shield Europe's steel industry in the midst of a global trade war by slapping a 25 per cent tariff on steel imports last July, which apply once a quota for predefined import volumes has been exceeded.

The move came in response to similar measures adopted by the US in March 2018, when the Trump administration imposed a 25 per cent tax on steel and a five per cent tax on aluminium from the EU, Mexico, and Canada.

The Commission is now proposing to relax the measures slightly, so that limits on import volumes for each steel category will increase by five per cent every year until 2021, based on a mixed system of global and country-specific tariff-rate quotas. EU countries are set to discuss the proposals in Brussels today before they vote on the measures on Friday.

But while WindEurope CEO Giles Dickson welcomed the move to increase steel import volumes, he warned an annual five per cent rise was still "very low".

Amid surging demand for steel among Europe's offshore wind developers, he said placing tariffs on steel imports could lead to an increase in the price of wind energy, potentially hampering the EU's ability to meet its 2030 renewables targets.

Tariffs on steel imports could add 18 per cent to the price of building wind turbines, Dickson argued, potentially offsetting the cost reductions achieved by the sector in recent years.

"It's in nobody's interest for access to steel volumes to turn into a scramble for raw materials with other sectors like we're all chasing seats in musical chairs," said Dickson. "Not least when our own sector has binding EU renewables targets it's got to help meet."

Last year the EU agreed a new binding target to source 32 per cent of its energy - both electricity and heat - from renewables by 2030. The share of renewables in the wider EU mix currently stands at just over 17 per cent.

The European Automobile Manufacturers' Association (ACEA) has voiced similar fears that the EU steel import restrictions could negatively impact the competitiveness of EU carmakers in the face of global competition.

However, EUROFER - the European Steel Association - has backed the EU's move to restrict imports, which it has said "will go a long way to ensuring the stability of the internal market" in the face of "global challenges" faced by the sector.

Dickson countered that with strict limits on steel imports in place meeting EU renewable energy targets would cost society "more than necessary" and put European turbine manufacturers "at a disadvantage to Chinese competitors that source domestic steel at much lower prices".

"We call on European countries and the Commission to agree a higher annual rate of increase in non-tariff volumes than the proposed five per cent when they vote on Friday," he added.