EU Electrification Action Plan to cut energy costs for steel
The European Union’s Electrification Action Plan (EAP) is nearing finalization, with its implementation expected in early 2026. As the EU steel industry continues to face soaring electricity prices—up to three times higher than those faced by global competitors—this situation not only challenges its profitability but also complicates the transition to greener, more sustainable operations. The EAP aims to provide affordable, renewable energy, helping to decarbonize key sectors, including steel.
What is the EAP and what’s next?
The Electrification Action Plan (EAP) is a key part of the EU’s strategy to accelerate the electrification of industrial sectors and reduce energy costs. Currently being finalized by the European Commission, the plan focuses on decoupling electricity prices from fossil fuels and providing affordable, renewable energy to industries. Among the measures under consideration are the promotion of long-term contracts, such as Power Purchase Agreements (PPAs) and Contracts for Difference (CfDs), to offer industries more stable and predictable energy prices. Additionally, short-term relief measures, including expanded carbon cost compensation, are being discussed to help energy-consuming industries cope with high electricity prices in the near term. The Commission is also considering subsidies for renewable energy infrastructure and support for grid investments to ease the financial burden of the energy transition on heavy industries.
EUROFER’s recommendations
EUROFER, the European Steel Association, advocates for specific measures to maintain the competitiveness of energy-intensive industries. The association recommends expanding support from the European Investment Bank to reduce the financial risks tied to long-term energy contracts. Additionally, EUROFER emphasizes the need to strengthen carbon cost compensation mechanisms. These measures would shield the steel sector from high CO2 costs imposed by the energy sector, helping to ensure its continued competitive edge in the global market.
According to EUROFER, "restoring electricity prices closer to pre-2021 levels of €44 /MWh is essential if Europe is serious about strengthening its steel industry". Henrik Adam, President of EUROFER and Executive Chairman of Tata Steel Netherlands Holding BV, said, "Steel is being held back by sky high electricity prices and costs. If the EU wants investment in low-carbon steel to happen in Europe, it must deliver total electricity costs closer to €50/MWh – across all member states." Axel Eggert, Director-General of EUROFER, added: "Steelmakers are taking decisions now. Without effective relief from high electricity prices, investment will move elsewhere and capacity will be lost."
Strategic targets for 2030
The EAP is a cornerstone of the broader Clean Industrial Deal, which aims to significantly increase the role of electricity in the EU’s energy mix. While renewables accounted for 47.5% of electricity consumption in 2024, electricity still represents only 23% of total final energy consumption. To meet climate targets and enhance system efficiency, the EU has set a key performance indicator to raise this share to 32% by 2030, ensuring that the benefits of clean, affordable energy reach both heavy industry and the wider economy.
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