A European Parliament committee has backed incentives to introduce low-carbon steel credits in the automotive sector, aiming to encourage carmakers to use cleaner materials and create stable demand for green steel.

Under the scenario described, replacing 40% of the steel used in a vehicle with clean steel that produces less than 400 kilograms of carbon emissions per tonne would add approximately €57 to the cost of each vehicle.

The proposal links demand for lower-emission steel to automotive material choices. For carmakers, the potential cost increase is one consideration; for steel suppliers, the key question is whether the incentive can translate into sustained demand for material meeting the emissions threshold.

The committee's support signals backing for the measure, but its eventual effect will depend on how the credit is designed and implemented, as well as whether carmakers adopt qualifying steel.