Grupo Megasa
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Grupo MEGASA es uno de los principales grupos siderúrgicos europeos, con presencia industrial en España, Portugal y Francia.
ID: 441086396384-61
Lobbying Activity
Response to Carbon border adjustment mechanism (CBAM) methodology for the definitive period
25 Sept 2025
Megasa appreciates the opportunity to provide its comments on the CBAM methodology. As a producer of steel through scrap based electric arc furnaces (EAF), we are committed to the EUs decarbonisation objectives and to a competitive, sustainable steel industry. The EAF route is the cleanest and most circular way to produce steel, based on scrap as its main raw material and generating much lower direct CO emissions than integrated routes. MEGASA, as part of EUROFER, fully supports the associations position but wishes to highlight specific concerns relevant to Portugal and the wider EU context. Exclusion of indirect emissions We understand the Commissions decision not to include indirect emissions in CBAM, given the difficulty of measuring them in third countries. However, for EAF producers, indirect emissions represent the largest share of carbon costs, since electricity is the main contributor to their CO footprint. These costs are fully internalised in the EU through the ETS and electricity prices, while imported steel does not bear an equivalent carbon cost. This exposes EAF producers to unfair competition from non-EU importers. EU State Aid Guidelines allow Member States to compensate indirect CO costs, but support levels vary significantly, as state aid mechanisms can result in higher support levels in Member States with greater fiscal capacity. In Portugal, where Megasa operates, compensation is significantly lower than in other Member States. This creates asymmetrical conditions within the internal market, undermining fair competition. Industry pays CO costs indirectly through electricity bills, because electricity prices already reflect the carbon costs incurred by power producers. Frequently, the market price is set by non-emitting technologies at a price corresponding to the cost of fossil-based generation (and thus, internalising CO2 cost). This creates an additional distortion, as the industry pays for carbon costs that do not correspond to the actual marginal source of electricity. Compensation therefore does not constitute a payment for the CO embedded in electricity itself, but rather corrects a market-driven cost pass-through that can undermine electrification and decarbonisation investments. Addressing this distortion is essential for preventing industrial relocation and carbon leakage. In conclusion, while we understand the rationale behind excluding indirect emissions from CBAM, we respectfully encourage the Commission to: Recognise the disadvantage this creates for European EAF producers when competing with imported steel. Ensure a harmonised and sufficient compensation scheme for indirect CO costs across the EU, in order to safeguard fair competition within the EU and to preserve the competitiveness of the most sustainable steelmaking route. Addressing this issue is key to fully achieving the objectives of the CBAM: protecting EU industry from carbon leakage from non-EU competitors and ensuring equal conditions for producers within the EU. Benchmarks in CBAM Benchmarks define the carbon intensity reference for imports. They must reflect the most efficient and sustainable EU production routes, not averages or high-emission technologies. For steel, the EAF route represents the cleanest and most circular production technology. It mainly uses recycled scrap and produces much lower direct CO emissions than integrated routes and therefore sets the standard for low-carbon steel production in Europe. If benchmarks are set using less efficient technologies, EAF producers would be unfairly penalised, imports from higher-emission processes could appear more competitive, and incentives for low-carbon production would be weakened. Conclusion CBAM benchmarks for long steel products, including rebar, wire rod, merchant bars, sections and billets, should reflect the performance of the EAF route. This will help ensure fair competition, encourage sustainable production, and support Europes climate objectives.
Read full responseResponse to Technical updates of the Emissions Trading Scheme (ETS) State aid guidelines
5 Sept 2025
MEGASA contribution to the review of EU ETS indirect cost compensation MEGASA, as part of EUROFER, fully supports the associations. Nonetheless, we consider it important to underline certain issues of particular relevance to Portugal and to the wider European context. 1 Rationale for compensation The compensation of indirect CO costs should not be regarded as a discretionary State-aid measure. Its real function is to rectify a structural distortion in electricity prices, rather than to create selective advantages. Without such correction, the current CO pass-through mechanism significantly weakens the business case for electrification and decarbonisation pathwayswhether direct or based on low-carbon carriers such as hydrogen, ammonia or synthetic fuels. It is important to emphasise that industry already pays these costs through its electricity bill, while generators capture them via market price formation and expectations (including forward prices and PPAs). Compensation therefore does not constitute a payment for the embedded CO in electricity, but rather corrects a market-driven cost pass-through affecting the entire generation pool. This conceptual distinction is essential to prevent de-industrialisation and carbon leakage. 2 Emission factor methodology and market realities The methodology for calculating emission factors requires updating. Renewable units frequently place bids aligned with the expected costs of fossil-based generation, meaning that CO costs are embedded in the clearing price even when zero-marginal technologies set it. In semi-isolated systems like the Iberian Peninsula, the issue is even more pronounced due to additional requirements for system services, redispatch and technical constraints, which intensify when renewable penetration is very high and pool prices fall. The ETS Guidelines of 2020 anticipated a 2025 revision of emission factors, reference areas and benchmarks. That revision should explicitly integrate: The influence of inframarginal bidding and market expectations on price formation. The specific characteristics of isolated and quasi-isolated power systems. 3 Policy guidance Position indirect CO compensation as a standardised, EU-wide corrective instrument, rather than as a discretionary subsidy. Update emission factor and geographic reference parameters so that they reflect both the market pass-through of CO costs and the structural costs of quasi-island systems.
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