Industry Leader Sounds Alarm on EU Green Policies

The European Union's aggressive decarbonisation strategy risks triggering a substantial decline in the region's steel production capacity, according to Antonio Marcegaglia, head of one of Europe's largest steel processing companies. Speaking at the Made in Steel conference in Milan last week, Marcegaglia characterized the EU's environmental targets as "ideological and somewhat unrealistic," expressing particular concern about their impact on flat steel production. His comments come at a critical juncture as European steelmakers struggle to balance climate commitments with economic viability amid rising energy costs and intensifying global competition. "I think this could lead to a downsizing of our steel production in Europe... We will have to take into account that a little bit of [European] capacity will not be sustainable in the long term," Marcegaglia stated during his address to industry stakeholders.

National Interests Overshadow Unified European Approach

Marcegaglia highlighted a persistent structural bias within EU policymaking that appears to favor certain member states, particularly Germany. This observation comes as European Commission President Ursula von der Leyen recently reaffirmed the EU's unwavering commitment to its decarbonisation trajectory despite mounting industry concerns. According to Marcegaglia, the EU's approach to industrial, energy, and defense policies reveals a pronounced emphasis on national interests rather than a cohesive continental strategy. "I struggle to see the possibility of delegating them [the policies] to a supranational body or to create a system," he remarked, pointing to the challenges of achieving genuine policy harmonization across the diverse economic landscapes of EU member states. This fragmentation complicates efforts to develop unified responses to existential challenges facing energy-intensive industries like steel production.

Regulatory Uncertainty Hampering Investment

The steel executive specifically cited the Carbon Border Adjustment Mechanism as emblematic of the regulatory uncertainty plaguing European industry. Despite its scheduled implementation in January 2026, Marcegaglia described the regulation as characterized by "uncertainty and a lack of clarity." This regulatory ambiguity creates significant challenges for long-term business planning and investment decisions, particularly for capital-intensive industries like steel that require substantial lead time for facility upgrades or technological transitions. The steel sector, which accounts for approximately 7-9% of global CO₂ emissions, faces enormous pressure to decarbonize while simultaneously maintaining competitiveness against producers operating under less stringent environmental regimes. Without clear, stable regulatory frameworks, European producers may hesitate to commit the billions needed for green technology investments.

Call for Coherent Industrial Strategy

Rather than focusing exclusively on subsidies, Marcegaglia advocated for comprehensive industrial policies that address the sector's fundamental needs. He emphasized the importance of facilitating technological investments and establishing clear regulatory frameworks that enable businesses to plan effectively for the green transition. "The European industry must advocate policy cohesion and demonstrate boldness in industrial strategies, emphasizing the critical role that industry plays in economic development," he stated. This approach would require policymakers to balance environmental ambitions with practical economic considerations, recognizing that premature deindustrialization could undermine Europe's strategic autonomy and economic resilience. Marcegaglia's comments reflect growing concern that Europe's decarbonisation timeline may be outpacing technological and economic realities.

Strategic Steel Dialogue Initiatives

Marcegaglia revealed his participation in the EU's strategic steel dialogue discussions, describing these engagements as "a declaration of intent" that establishes a foundational reference framework. While acknowledging the importance of these dialogues, he emphasized the need for them to translate into concrete actions in the coming weeks. The EU's steel sector, which directly employs about 330,000 people and indirectly supports millions more jobs, represents a critical component of European manufacturing capability. The strategic dialogue initiative aims to address challenges facing the industry, including decarbonisation costs, energy prices, and international competition. However, Marcegaglia's comments suggest skepticism about whether these discussions will yield timely and effective policy interventions.

German Influence on EU Industrial Policy

Underlying Marcegaglia's critique is concern about Germany's outsized influence on EU industrial policy. As Europe's largest economy and steel producer, Germany wields significant power in shaping regulations that affect the entire continent's manufacturing base. This dynamic can create tensions when German national interests diverge from those of other steel-producing nations like Italy, Spain, or Poland. Marcegaglia's comments suggest that some EU policies may disproportionately benefit German industry while creating challenges for producers in other member states. This perceived imbalance complicates efforts to develop truly European solutions to shared challenges like decarbonisation, energy security, and international competitiveness.

Balancing Climate Goals with Industrial Preservation

The fundamental tension between ambitious climate targets and industrial preservation remains unresolved in European policy circles. While the EU has positioned itself as a global leader in climate action, with commitments to reduce greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels, the practical implications for energy-intensive industries like steel production remain contentious. Marcegaglia's warning about capacity reductions reflects growing concern that Europe may effectively outsource its emissions by importing steel from regions with less stringent environmental standards, resulting in "carbon leakage" without meaningful global emissions reductions. This scenario would undermine both European industrial capability and global climate objectives, highlighting the need for carefully calibrated transition policies.

Market Implications and Global Competitiveness

The potential downsizing of European steel capacity would have far-reaching implications for supply chains, pricing, and strategic autonomy. With European steel production already facing challenges from imports, any significant capacity reduction could increase the region's dependence on foreign suppliers for critical materials. This dependency raises concerns about supply security, particularly for industries like automotive, construction, and defense that rely heavily on specialized steel products. Furthermore, if European producers bear higher compliance costs than their international competitors, maintaining market share becomes increasingly difficult. Marcegaglia's warning serves as a reminder that decarbonisation policies must be designed with careful attention to their competitive implications, lest they accelerate deindustrialization rather than sustainable transformation.

Key Takeaways:

• Antonio Marcegaglia warns that the EU's decarbonisation strategy could lead to significant downsizing of European steel production capacity, particularly affecting flat steel producers facing unsustainable operating conditions.

• Regulatory uncertainty surrounding the Carbon Border Adjustment Mechanism (CBAM) and other green policies is hampering industry's ability to make long-term investment decisions despite the mechanism's imminent 2026 implementation.

• European industrial policy appears increasingly fragmented along national lines, with Marcegaglia specifically highlighting Germany's outsized influence on regulations that may disadvantage producers in other member states.