Germany launches funding programme for ‘green steel’

In 2019, the steel industry was responsible for around one third of direct industrial emissions in Germany with CO2 emissions of over 36 million tonnes. [EPA-EFE | Friedemann Vogel]

German environment minister Svenja Schulze (SPD) has made €5 million available to Salzgitter AG group to produce climate-friendly steel as part of a wider project on industry decarbonisation. The opposition criticises a lack of industrial policy. EURACTIV Germany reports.

The aim of the decarbonisation programme is “to reduce process-related greenhouse gas emissions in energy-intensive industries such as steel, cement, lime and chemicals” using innovative technologies, according to the environment ministry (BMU), which published a note on Friday afternoon (4 December).

The conversion of Salzgitter’s blast furnace plant to low-CO2 steel production is scheduled to take place in the next two years. Hydrogen will be used instead of coking coal in the production of crude iron. A test plant of this kind has already been commissioned this year in Luleå, Sweden.

Environmental groups and the opposition have long been calling for support measures in favour of “green steel” in Germany. The €5 million funding decision for Salzgitter AG is a step in the right direction, says Dieter Janecek, Green Party MP and spokesman for industrial policy.

“It is sensible and right to promote pilot plants, for example for steel production through direct reduction,” he told EURACTIV Germany.

However, the energy required for both hydrogen production and steelmaking will not yet come entirely from renewable sources, even if this is the long-term goal. If not enough green hydrogen is available, there will be no other option than to use hydrogen produced from fossil gas instead.

The Swedish test plant, called “Hybrit” (Hydrogen Breakthrough Ironmaking Technology), already uses green hydrogen produced exclusively in Sweden.

Swedish steel boss: ‘Our pilot plant will only emit water vapour’

A new pilot facility under construction in northern Sweden will produce steel using hydrogen from renewable electricity. The only emissions will be water vapour, explains the CEO of Hybrit, the company behind the process, which seeks to revolutionise steelmaking.

Steel industry responsible for 36 million tonnes of CO2

For this reason, Janecek criticises a lack of industrial policy on the part of the German government: “On the crucial questions – namely where the electricity from renewable sources and the green hydrogen should come from in the future, the federal government continues to leave industry standing in the rain.”

Without a massive expansion of green electricity and green hydrogen, the ecological transformation of the industry will not succeed, he believes.

In 2019, the steel industry was responsible for around one third of direct industrial emissions in Germany, with CO2 emissions of over 36 million tonnes.

The need for transformation towards lower emissions is therefore immense. The BMU is planning to make around €2 billion available through the Energy and Climate Fund in the coming years.

However, the Greens are insisting on concrete measures to ensure that industrial CO2 reduction pays off for companies and that cost disadvantages for sustainably producing companies can be minimised.

This also involves international competition. Europe must become the leading market for CO2-free products, Janecek says, suggesting quotas for CO2-free steel in cars.

Steelmakers call for 'Green Deal' to counter Chinese dumping

European steelmakers were already reeling from dumped Chinese imports and US tariffs when the coronavirus pandemic hit this year. According to trade body Eurofer, it will take two years for the industry to recover, a process it says could be accelerated with a new “Green Deal for steel” and a carbon border levy.

[Edited by Frédéric Simon]

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