European Aluminium Welcomes Relief From EU On High Energy Prices, But Warns More Is Needed

European Aluminium Welcomes Relief From EU On High Energy Prices, But Warns More Is Needed

Europe’s aluminium trade group lauded the European Union for its action to turn back high energy prices. However, the European Aluminium Association warned that the measures are only the first step in tackling the problem.

The association said that the short-term measures, which include efforts at reducing electricity demand and redistributing financial resources to customers struggling under high prices, provide greatly-needed relief in the short term. However, European Aluminium notes that the measures do little to cut the high electricity costs, and specifically the high cost of natural gas, that are plaguing the European aluminium industry.

Paul Voss, European Aluminium’s Director General, said in a press release that the EU must take certain specific measures to provide long-term relief to the aluminium industry.

“We’re glad to see the Commission listened to our calls for the need to safeguard hedging possibilities and introduce further incentives for signing renewable power purchase agreements. However, as one of Europe’s most exposed industries, we need much more relief from the exorbitant gas prices to keep our factories open. We’re extremely concerned about the survival of the aluminium industry in Europe and are worried that these proposals do not reflect the urgent need to support a critical industry like aluminium.”

“We urge Energy Ministers to take additional measures during the next Council meeting on 30 September,” he continued. “Without further action, we risk becoming completely dependent on imports for a material that is key to Europe’s green transition.”

European Aluminium went on to say that the already-substantial cost of electricity as a portion of aluminium’s production costs have become prohibitively expensive thanks to recent spikes in Europe’s electric prices. By the end of the year European Aluminium expects that fully half of the continent’s aluminium production, totaling 1.1 million metric tons, is likely to be shuttered.

Not only that, European Aluminium says that high energy costs and natural gas shortages hurts the downstream aluminium industry in Europe, as aluminium extrusion operations require a steady and dependable supply of natural gas to continue in operation. So too for aluminium recycling, as combining aluminium scrap with gas is the only way currently in use to produce secondary raw materials.

“Even before the crisis, European aluminium producers faced much higher energy prices compared to their competitors because of the regulatory costs associated with the EU’s unique energy market design,” concluded Voss. “But right now, not only our competitiveness is at stake; the European aluminium industry is facing eradication. The proposed measures need to be swiftly amended by EU policy makers. For instance, the proceeds from the temporary solidarity contribution should finance schemes under the EU Temporary State Aid Framework to support critical industries in these times of crisis. It should also be clear that they must be used by national governments to alleviate not only high electricity but also high gas prices.”