European recyclers are outlining their concerns about the proposed revision of the draft free allowance regulation for the European Emissions Trading System (ETS) announced last week in an open document signed by various climate action organizations and the German recyclers' association (BDSV).
The draft FAR (Federal Acquisition Regulation) regulates free allocations for the period 2026-2030, during which the new Border Carbon Adjustment Mechanism (CBAM) will be implemented. According to the draft, primary steel mills producing from iron ore will receive more free allowances than scrap production based Electric Arc Furnace (EAF) mills.
It is expected to promote fair competition between different steel production modalities, while at the same time encouraging the replacement of converted ore with steel scrap in plants, and the FAR review should maintain consistency with the text of the ETS Directive in line with the EU's climate-circularity objectives.
By April 2024, the European Commission expects the new regulation to be adopted and the FAR review was published last week, with the intention of seeking public comments by the beginning of January.
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