A low-carbon steel credit worth up to 7.5% of compliance is now part of the European Parliament’s compromise on car and van CO2 standards, reached on 20 October 2026 by the European People’s Party, the Socialists and Democrats and Renew. The compromise keeps an 87.5% cut in vehicle CO2 emissions by 2035 against 2021 levels, and lets qualifying steel made in the EU count toward up to a further 7.5%. Eurofer, the steel industry association, welcomed the text on 21 October.
Eurofer’s own summary line describes the credit as letting carmakers meet 3% of their CO2 targets through low-carbon steel made in the EU, rising to 7.5% from 2035. A Parliament vote is expected later in 2026, ahead of negotiations with the Commission and the Council, so nothing here is binding yet.
What Eurofer wants kept in the low-carbon steel credit
The association asks for two things to survive into the final agreement. The low-carbon steel credit should stay dedicated to steel and not be widened to other low-carbon materials, which Eurofer argues could be supported through separate incentives. And the text should keep a strong Made in the EU requirement, so that only steel melted and poured in the EU qualifies. Its director general, Axel Eggert, put it in one line: “Low-carbon steel made in the EU should go into cars made in the EU.”
The position is not new. Eurofer’s paper of 19 January 2026 asked for the low-carbon steel credit to apply from 2030 and for 85% of steel to be melted and poured within the EU, citing the Commission’s impact assessment. That paper put steel at roughly 15% to 25% of the manufacturing phase emissions of a passenger car. The October release gives a different range, an estimated 16% to 27% of vehicle production emissions. Both are Eurofer estimates, and the ranges overlap without matching.
How big is a 7.5% low-carbon steel credit?
The release does not say whether 7.5% counts as percentage points of the 2021 baseline or as a share of the emissions that remain after the 87.5% cut. The difference is large. Read as 7.5 percentage points of the baseline, the low-carbon steel credit would move the effective cut from 87.5% to 80%, leaving 20% of 2021 emissions instead of 12.5%. Read as 7.5% of the remaining 12.5%, it is worth about 0.94 percentage points. Both are ENB calculations from the published figures, and the legislative text will settle which one applies.
| Figure | Value | Origin |
|---|---|---|
| Vehicle CO2 cut by 2035 vs 2021 | 87.5% | Parliament compromise, 20 October 2026 |
| Steel credit toward compliance | Up to 7.5% | Parliament compromise, as reported by Eurofer |
| Credit in Eurofer’s summary | 3%, rising to 7.5% from 2035 | Eurofer release, 21 October 2026 |
| Low-carbon steel projects planned or underway | More than 60 | Eurofer release |
| Possible added capacity by 2030 | Over 20 million tonnes | Eurofer release |
| Steel per vehicle | About 800 kg (40% to 50% of weight) | Eurofer release |
The capacity claim, tested against 800 kg per vehicle
Eurofer says the projects could add over 20 million tonnes of low-carbon automotive steel capacity by 2030, enough to supply all vehicles registered annually in the EU. At 800 kg a vehicle, 20 million tonnes covers 25 million vehicles (20,000,000 divided by 0.8), an ENB calculation. The claim is for capacity planned or underway, not steel delivered or certified. The release does not define low-carbon for the purposes of the credit, and it does not say what share of the 20 million tonnes would be melted and poured in the EU. Those two missing definitions decide who qualifies.
Green steel capacity also depends on power, and a recent UK case shows the delay risk: Tata Steel’s grid connection, contracted for 2027, is now not coming until 2029. A low-carbon steel credit that starts in 2030 assumes the electricity arrives on time.
The next dated step is the Parliament vote later in 2026, followed by talks with the Commission and the Council. The 7.5% wording of the low-carbon steel credit and the Made in the EU condition are the two lines to watch. Sources: Eurofer release, 21 October 2026 and the Eurofer Automotive Package position paper, 19 January 2026.
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