After receiving billions in state aid and free pollution subsidies to decarbonise its production, steel producer ArcerlorMittal put its clean steel projects on hold.

Once again, steel giant ArcelorMittal has shown its true mettle, instead of exhibiting steely resolve to tackle the climate crisis. 

The company had previously pledged to reduce CO₂ emissions by 35% in its European operations by 2030 and achieve carbon neutrality by 2050. To support these goals, ArcelorMittal had announced significant investments across Europe. However, ArcelorMittal said, at the end of November, that it would shelve its Direct Reduced Iron (DRI) projects across Europe.

This is despite generous awarded support from the taxpayer to the tune of at least €3 billion. This includes €1.3 billion in German state aid in 2024, €850 million in French state aid in 2023, €280 million in Belgian state aid in 2023, and a €600-million loan from Flanders in 2024. 

On top of this state aid, the steel giant received about €3.76 billion worth of free pollution permits in 2023 under the EU’s Emissions Trading System (a total of 45 million allowances), enabling it not to pay a cent for emitting 33 million tonnes of CO2. This constitutes one third of total EU steel production emissions. The company, as happens most years, accrued a surplus of emissions allowances, raising the possibility of windfall profits over and above the licence it received to pollute for free.

Like the state aid provided to ArcelorMittal, these freebies are, in theory, meant to reduce the financial burden on heavy industry so that it can channel these resources into decarbonisation. Here, this is clearly not the case.

Money for nothing

Accepting that kind of financial support to decarbonise and not doing so reminds us of a word that sounds like steel.

With very questionable timing, Lakshmi Mittal, the company’s chairman, published an op-ed in The Financial Times this week, taking readers through the litany of challenges that Mittal claims are facing Europe’s steel industry. 

The article is a direct and frontal attack on the upcoming Carbon Border Adjustment Mechanism, which aims to protect decarbonising European industry against unfair competition from parts of the world with laxer environmental standards. While claiming to be one of CBAM’s first supporters, Mittal states that the policy instrument is leaky, full of challenges and loopholes, and accuses Europe of not being strong enough in “making a choice”. 

But Europe has already made its choice, and that is to lead on climate and industrial innovation. The problem is not with the EU’s but with  ArcelorMittal’s choices. The steelmaker is now backpedalling furiously against its own climate commitments, despite all the state largesse it has received to deliver the promised emission reductions. But the European Green Deal is not an optional extra, it must be respected, to echo basically what every commissioner said during their hearings at the European Parliament. 

Don’t blame climate regulations

There’s no denying that the CBAM will need to be tweaked to close loopholes (such as the pre-consumer scrap issue) and allow for a smooth start of the actual pricing period. However, they can be tackled in the months to come, and surely we can’t expect the CBAM alone to solve the crisis of industrial production, which can’t be traced back to climate regulations, since industrial manufacturers haven’t really been burdened by the carbon price to date. In fact, one major challenge is the glacial pace with which free allowances will be eliminated, reflecting just how addicted European industry has become to these freebies. The downside to this slow phasing out is that CBAM will only gradually apply to imports, allowing the true benefits of this tool to only be visible at the beginning of the next decade.

There are opportunities in 2025 and before January 2028 to correct these imperfections and ensure domestic production is not subject to carbon costs while polluting imports are free to flood the market. But this requires willingness from policymakers and companies to act decisively and resolutely. They can’t make the start of CBAM conditional on how convenient some domestic producers find it.

Policy clarity matters, and the EU has been signalling for years that a climate-conscious industrial future is on the horizon. Companies like ArcelorMittal must show bold leadership by committing to decarbonisation – which they have not, yet. It is the most polluting heavy industry company in the EU, according to our research, while steel production, as a whole, is still responsible for 5% of the EU’s total emissions. 

European policymakers have a choice to ensure that the upcoming Clean Industrial Deal is a truly clean deal. We can’t lag behind anymore in tackling the climate crisis, and policymakers can’t afford to bow to multinational conglomerates as they keep banking public subsidies to deliver nothing in return.

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ArcelorMittal is part of the EU’s Emissions Aristocracy. Find out more in our report.