Germany at a turning point: Green steel in danger – who will hold out?

Germany at a turning point: Green steel in danger – who will hold out?

The steel industry is considered one of the largest CO2 emitters in the world. To increase environmentally friendly standards, many steel manufacturers are turning to the production of “green steel,” which is made with green hydrogen. But ArcelorMittal's announced decision to withdraw from a major sustainable steel project is causing concern in the industry. This project originally raised great hopes for emission-free production without the use of coal, and despite government funding of around 1.3 billion euros, the project is now on hold. This is seen as a warning signal for politicians and industry, reports radio one.

Although ArcelorMittal has ended its involvement in the project, other companies such as Thyssenkrupp Steel, Salzgitter AG and Saarstahl are sticking to their plans. However, these companies face significant challenges, particularly the lack of hydrogen infrastructure. The necessary pipelines and electrolysers are not sufficiently developed to ensure a comprehensive transition to green steel, such as ZDF Today reported.

The challenges of green steel production

The path to green steel is associated with high costs. For Thyssenkrupp, it is estimated that the additional annual costs could be between 300 and 400 million euros. Additionally, hydrogen cost reductions are occurring more slowly than expected, making the difference between green and low-carbon hydrogen larger than originally thought. The lack of binding purchase guarantees and a market for green steel that is not yet functioning make the situation even more difficult.

Economist Andreas Löschel from the Ruhr University Bochum expresses serious doubts about the feasibility of the transformation to green steel in global competition. He points out that a comprehensive hydrogen network will not be available until 2029 at the earliest. Until this point, Germany is dependent on imports of hydrogen. In addition, trade tariffs, such as the 25% tariffs on European steel in the USA, are putting a strain on the situation of the European steel industry.

Opportunities and prospects

Despite these challenging circumstances, North Rhine-Westphalia's Economics Minister Mona Neubaur emphasizes the opportunities that come with a switch to green steel. She argues that this could enable sustainable growth and a positive contribution to climate protection. However, Löschel also warns that simple trust in promises and funding is not enough. A clear industrial policy course with less restrictive framework conditions is needed in order to actually realize the transformation.

The German dream of green steel is therefore in jeopardy, but it has not yet failed. The next few years will be crucial in creating the necessary infrastructure and markets for successful implementation.