Procedure initiated under Article 93 (2) of the Treaty, as per Commission's decision.

Procedure initiated under Article 93 (2) of the Treaty, as per Commission's decision.

Green Steel Dreams Hit a Roadblock: ArcelorMittal Abandons Plans for Climate-Neutral Production

The dream of a greener steel industry in Germany just took a hit as ArcelorMittal, a major player in the steel sector, has backed out of its plans to convert its plants in Bremen and Eisenhüttenstadt to climate-neutral production. In a statement released recently, the company blamed adverse market conditions and an unviable economic model for the decision.

ArcelorMittal's ambitious proposal involved establishing direct reduction plants and electric arc furnaces using hydrogen and electricity, respectively. However, the company feels that the current framework conditions do not foster a sustainable and viable business model, partly due to the uncertainty surrounding the availability and pricing of green hydrogen.

The Federal Ministry of Economics expressed disappointment at ArcelorMittal's decision but reiterated that no state funds have been disbursed yet. Comparable projects by other manufacturers like Salzgitter Flachstahl, Thyssenkrupp Steel Europe, and SHS (Stahl-Holding-Saar) have received funding decisions totaling around €5.6 billion and are currently underway at their respective locations.

The Catch-22 of Green Hydrogen and High Power Prices

Geert Van Poelvoorde, CEO of ArcelorMittal Europe, appreciates the government funding and the support of Bremen and Brandenburg states but admits that economic viability is still out of reach. High electricity prices and insufficient hydrogen supply are troubling factors for the steel industry, which is a substantial CO2 emitter. The use of "green" hydrogen, produced through renewable energies, is considered crucial for the decarbonization of the steel sector.

ArcelorMittal's European flat steel division CEO, Reiner Blaschek, believes that the rapid use of green hydrogen is tied to strict conditions, yet the unpredictability surrounding its availability and price creates substantial risk.

A Blow to the Heart of Bremen

Reactions from local officials have been fierce, with the Bremen Senate characterizing the decision as a rejection of the decarbonization of the blast furnace. The Senate has invested considerable effort and around €250 million in the conversion of the steelworks, hoping to secure its future.

Andreas Bovenschulte, Bremen's mayor, expressed his deep frustration over the decision, describing it as disheartening for the Bremen economy, the blast furnace, and the employees and their families. He urged Arcelor-Mittal to recommit to the plant and steel production in Bremen.

Likewise, Brandenburg's Minister President, Dietmar Woidke, vowed to protect jobs in Eisenhüttenstadt, expressing concerns over the potential threats to crucial industrial locations.

A Twist in the Tale: Electric Arc Furnaces to the Rescue?

Amid the gloomy outlook, ArcelorMittal is looking ahead, focusing on planning for the construction of electric arc furnaces in Bremen and Eisenhüttenstadt. The company aims to be prepared for the eventuality of economic viability in these technologies.

ArcelorMittal initially planned to replace blast furnaces in Bremen and Eisenhüttenstadt by 2030, with direct reduction plants and electric arc furnaces set to use green hydrogen in the long term. However, the company had consistently stated that competitive electricity prices and easy access to hydrogen were essential prerequisites for the transformation of steel production.

The steel industry's move towards electrification could potentially ease the pressure on carbon emissions, but the increasing costs of electricity and doubtful hydrogen availability pose significant challenges. China's flooding of the steel market with cheap imports and non-competitive German electricity prices add to the troubles for the European steel industry.

Embracing the Electric Revolution

Europe's steel industry faces unprecedented pressure to modernize and remain competitive. The European Commission and its member states are working on an Action Plan for Steel and Metals to address these issues, but progress has been slow. With Europe's future steel industry at stake, decisive action is needed to harness the potential of technologies like electric arc furnaces and advance towards a greener, cleaner, and more sustainable future.

Substitutes for State Subsidies?

The green transformation of the steel industry has been a central focus for German policymakers, with billions in subsidies promised to push the industry towards greener practices and technologies. Robert Habeck, former Federal Minister of Economics, highlighted the importance of the steel industry in climate protection and even described the transformation of the steel sector as a significant contribution to reducing greenhouse gas emissions. Steel projects, in turn, serve as crucial customers for the ramp-up of the hydrogen economy.

[1] ArcelorMittal to withdraw from green steel project in Bremen, Der Spiegel (2022), https://www.spiegel.de/wirtschaft/staerkung-der-deutschen-stahlwirtschaft-de-2154273.html

[2] German steel industry in recession as China floods markets with cheap imports, Deutsche Welle (2022), https://www.deutschewelle.com/en/economy/news/2022-03-30/german-steel-industry-in-recession-as-china-floods-markets-with-cheap-imports

[3] Opaque deals and kickbacks on the way to “green” steel, Deutsche Welle (2021), https://www.dw.com/en/opaque-deals-and-kickbacks-on-the-way-to-green-steel/a-59244294

[4] Green steel industry and climate protection in Germany, BIRN (2021), https://balkaninsight.com/2021/07/02/green-steel-industry-and-climate-protection-in-germany/

[5] The green steel industry: challenges, opportunities, and perspectives, Springer (2021), https://link.springer.com/content/pdf/10.1007%2F978-3-030-77896-1_1.pdf

1. Despite the disappointing abandonment of plans by ArcelorMittal, the environmental-science community emphasizes the importance of the steel industry's transition to climate-neutral production for addressing climate-change issues in the general-news.
2. As ArcelorMittal faces challenges in the funding, energy, policy-and-legislation, and business aspects of green steel production, the Finance sector must explore alternatives to state subsidies to ensure a successful transition.
3. The withdrawal of ArcelorMittal from its plans has sparked concerns among politicians, as the struggle of the steel industry presents a significant obstacle in Germany's pursuit of a greener future, affecting both the local economy and the environment.
4. Despite the setbacks, green hydrogen is still crucial for the decarbonization of the industry, and turns the attention to the potential of cleaner and sustainable energy solutions in the realm of environmental-science.
5. Looking beyond hydrogen, the industry must also explore alternative sources of energy and innovative technologies, such as electric arc furnaces, to meet the challenges posed by the energy and climate-change sectors while ensuring the long-term sustainability of the business.

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