In a joint paper, the organisations say that the ETS is already reducing UK steel's competitiveness and stifling its ability to invest in innovation.
They say carbon leakage measures – which are meant to stop the EU ETS affecting the international competitiveness of vulnerable industries like steel – are not delivering the level of support promised and will become increasingly inadequate over time.
"If they remain unchanged, the EU ETS will add nearly £30 a tonne to average steel production costs by 2030," UK Steel said. It added: "This could be disastrous to an industry in which contracts can be won or lost on as little as £5 per tonne of steel and, at today's production levels, would cost the UK sector as a whole more than £300 million a year."
Gareth Stace (pictured), director of UK Steel, said: "The steel sector employs around 30,000 people, many in areas of relatively high unemployment, and contributes more than £45 billion to the UK economy. And yet it is a sector under extreme stress. Surplus production capacity in the global market, unfair trade practices, a strong pound, high energy costs and regulatory pressures such as the EU Emissions Trading System are all making it hard for UK plants to compete."
He added: "The steel sector wants to play its part in meeting the UK's carbon targets and is actively researching lower carbon production methods. But it needs support and the current regulatory regime – and particularly the EU ETS – is hindering rather than helping by reducing our overall competitiveness and removing money each year that could be invested in innovation."
UK Steel and Community's full paper - Making reform of the EU Emissions Trading System work for Steel – can be downloaded here.
