Steel is the backbone of the German industry – but it is a major source of greenhouse gas emissions, accounting for about 7% of Germany’s CO2 emissions.
As Germany has promised to become carbon-plate compared to the rest of the European Union 2045 years ago-the Steel industry should cut up to 55 million metric tons of CO₂ annually, which according to the German Steel Federation LBI Group, is about 30% of all industrial emissions.
To make the production of German steel much more durable, the previous government, which includes social democrats, environmentalists, and pro -business FDP, adopted policies encouraging hydrogen with hue state subsidy.
Green hydrogen produced with renewable energy is planned to replace coal in the industry.
Why Arselormittal pulled plans for green steel in Germany
One of the steelmakers, who initially applied for government subsidy, was a corporate-based steel group Arcelmital under a corporate scheme, which was intended to be made by the company’s two steel works carbon-neutrals by 2050.
The German government supported a plan of € 1.3 billion ($ 1.5 billion) in subsidy to facilitate infection in hydrogen-based steelmaking.
However, last month, ArcelorMital announced that it is stopping the decarbonation plans on its sites in Bremen and Essenhettenstadt, and would hand over the subsidy back to the grant.
Arcelormormittal Europe said, “At the slow pace compared to the expected progress on all aspects of energy infection, there is not yet a webbal fuel source and natural gas-based DRI production, including green hydrogen, which is not competitive as an interim solution.” statement,
The company’s CEO Geert Van Poelvorde said that the European steel market is currently “under unprecedented pressure, with week demand and high level imports.”
The possibility of billions in subsidy is not enough
The German Green Steel Plan from Arselormital’s pullout exposes the risk to fully start a green transition course for companies.
The German state’s money was mainly to cover the large -scale advance costs of the construction of € 1.3 billion mainly new production facilities. But this is the only part of the problem.
Using green hydrogen in steel production – produced by water electrolysis, mainly using renewable lightning from wind and sun – is still more expensive than gray hydrogen based on natural gas or cooking coal.
Nevertheless, green steel should eventually compete on global markets with cheap, traditionally produced steel. When changes in global coal prices affect all steelmakers equally, Stephen lachenbommer says, switching on hydrogen-based production means “entering a completely different market.”
“Hydrogen is produced locally, and long transportation is very different,” a professor at the University of Casel in Germany told DW.
What targets a pie in Germany’s hydrogen sky?
But the issue is not just the cost; Supply is a major challenge. German steelmakers will require a reliable and afflicted supply of green hydrogen, a part of which should be produced domestic.
Germany according to National hydrogen strategyThe country aims to produce 10 GW (GW) of electrolyzer capacity by 2030 to produce green hydrogen.
But this goal seems to be a wishful thinking, because by February 2024, Germany had only 0.066 GW installed electrolyzer capacity, data from government data Energy transition monitoring report Show.
The German ARD Public Television recently stated, “It is almost impossible to meet the 2030 target,” Martin Vitshell, the energy expert at the Frownhofer Institute for Systems and Innovation Research, recently told the German ARD Public Television.
Hydrogen imports essential but disable
Energy experts agree that most hydrogen Germany needs will have to be imported from other countries, which is why the government has amended its strategy, now assuming that the estimated 2030 demand will have to be sour from abroad between 50% to 70% of the demand for 2030.
Berlin is now working to ensure that both foreign production capacity and comprehensive transport infrastructure will be in place until then.
At the European Union level, a range of Hydrogen infrastructure projects The pipeline is for completion by 2030 – which involves re -introducing natural gas pipelines to carry hydrogen and create new ones completely.
Here too, progress is interrupted by failures. For example, several pipeline projects have been canceled or delayed, including a North Sea pipeline and a pipeline from Denmark for Germany employed by the Northway’s Equiner.
At the same time, hydrogen shipping in the oceans is not yet large. Hydrogen should be liquefied for ship transport in a process, which requires cooling at minus 253 ° C (minus 423 ° F).
Alternatively, it can be converted into ammonia for transportation, but it will cause energy loss of about 50%.
As a result, transportation cost wind-or sun-rich countries such as Namibia, Chile, or Australia’s cost advisors will cancel, the expert said, which was postponed as Green Hydrogen partners for Germany.
Some steelmakers remain courses
Given the rising cost and sluggish investment on both supply and demand, A Study By the Institute of Energy Economics (EWI) at the University of Cologon, Germany, the 2030 targets of the European Union and Germany for Green Steel are still obtained.
But despite the challenges, the Arselormital is not completely leaving green steel – it is just transferring production to countries with more predetermined and inexpensive power supply.
In May, the company announced that it would manufacture the IT New Electric Arc Furnace (EAFS) in Dunkark, France, which are among the countries that “to visible and certify” on low -cost electricity “. ,
The current electricity prices in Germany, the statement stated, is higher than both with international and European neighbors.
Hold out and wait for the European Union Carbon Market
In contrast, German steelmakers Thecenacapp and Saljiter AG say they are committed to Germany as a place for the production of green steel.
After the pullbacks of Arselormittal, both companies, however, called for better security measures for the growth of infrastructure and competitive energy prices.
Unlike Arselormittal, who own the worldwide steelwork, both companies are based only in Germany, which lacks flexibility to move production abroad.
Public procurement can help them, especially the current government plans to spend a large scale on the rebuilding of the German infrastructure under a multi-universe investment scheme.
Therefore that money can be used to support the production of green steel, the lachenbommer argues, but the government should “be ready to pay high prices for green steel.”
In the long run, steel prices in Europe – whether traditional or green – are likely to grow in 2027 due to a new ECC emission trading system.
Currently, most industrial companies have obtained their emission allowances for free. But the new plan of the European Union will introduce a carbon market that will promote prices for coal -based steel compared to green steel.
A Study By Boston Consulting Group Projects that traditional steel will no longer be financially humble in Europe after 2030.
This article was original in German.
