Europe: The Green Deal sets ambitious targets for the steel industry

The Green Deal sets ambitious targets for the steel industry

Ursula von der Leyen, President of the European Commission, compared her recently presented climate plan in Brussels with the US programme for the moon landing in the 1960s. By 2050, no new greenhouse gases from Europe should be emitted into the atmosphere. Industry is trying to meet the requirements, but at the same time is sceptical about the possibility of achieving success.

The Commission has put on its agenda that the emissions of the association of states must be 50 to 55 per cent below the 1990 level by the interim target of 2030. As part of this, the EU requires the steel sector to significantly reduce its process emissions by switching to hydrogen, which is produced exclusively with renewable energy (Power-To-X). For this purpose, water (H 2 O) is energised in an electrolyser, so hydrogen (H) and oxygen (O) are separated from each other. The hydrogen can then be stored and converted back into electricity or heat at a later stage. Steelmakers such as ArcelorMittal, thyssenkrupp Steel Europe and Salzgitter are already experimenting with this technology to improve their carbon footprint. The aim is to create an alternative to the current conventional process for steel production, which uses the integrated blast furnace (BF). Using a BF, the carbon-containing fuel coke (C) is used to dissolve the oxygen. This oxygen combines in the blast furnace to

form carbon dioxide (CO 2 ), which subsequently ends up in the environment.

Competitiveness of the EU steel industry must be maintained Generally speaking, the European steel industry supports the objectives of the Commission, but reminds the political decision-makers that “investments and the need for regulation will be massive,” emphasises Axel Eggert, Director General of Eurofer. “The steel industry is alPhotos: Shutterstock

Wind farms are likely to enjoy high subsidies in the future, according to the EU Commission. There should be an end to power generation from coal.

For Ursula von der Leyen, the Green Deal is her first major project as President of the European Commission.

ready working on several low to carbon-neutral solutions which, with an optimal regulatory framework, could lead to a reduction in CO 2 emissions of up to 95 per cent in 2050,” Eggert continues. The “Green Steel for Europe” pilot project is regarded as an example of such efforts. Ten project partners are working on solutions for low-carbon or neutral steel production, including Eurofer, the VDEh-Betriebsforschungsinstitut (BFI) and the European Steel Technology Platform (ESTEP). The project intends to develop a technology roadmap and define both mid-term and longterm pathways for the decarbonisation of the steel industry. It also wants to analyse funding options and assess the economic, social, environmental and industrial leadership impact of the EU policy measures.

Hans Jürgen Kerkhoff, President of the German Wirtschaftsvereinigung Stahl, also thinks that fundamental changes in the political framework are necessary to achieve climate neutrality. A broad mix of political instruments in the form of start-up financing, investments and the creation of “green” lead markets is required. Kerkhoff also states that an energy policy infrastructure must be provided first.

Dieter Kempf, President of the Federation of German Industries (BDI), expressed his concerns more radically. The constant tightening of climate targets, which is leading to uncertainty among consumers and companies, is “poison for longlasting investments”, Kempf said in a press release. For him, the future viability of Europe depends on more than the ecological goals of the Green Deal: “International competitiveness must be an equally important goal because a competitive and innovative industry must make the necessary investments in climate and environmental protection.”

Agreement subject to the risk of carbon leakage

According to Eurofer, the transition to low-carbon steel production requires 400 TWh of electricity, of which 5.5 million tonnes are needed to produce hydrogen. The Commission must ensure that there is a market for this “green” steel, the production of which could cost 35 to 100 per cent more than the processes currently used, Eurofer said.

There is also a risk of carbon leakage, a problem which arises as soon as companies relocate their production to other countries with less stringent emissions regulations because of the costs associated with climate measures.

If companies from the EU import steel from countries that have a low level of climate protection, they must expect a CO 2 price of initially 10 euros per ton of CO 2 from 2021, is the current decision of the Commission. As international competitors would not have to bear the costs of the climate tariff, border adjustments would be necessary for imports to maintain the competitiveness of the European steel industry. Eurofer already discussed the topic in June 2019 at the European Steel Day. In the context of the current Green Deal, the association has advocated a more comprehensive system to adjust the forthcoming CO 2 pricing for countries outside the EU. This should provide these steel producers with an incentive to reduce their emissions.

Climate tariffs endanger international relations

At the global political level, it becomes problematic as soon as the climate tariff affects diplomatic relations. As German newspaper Die Zeit reported in December, there are already first signs of this happening. Chinese government advisor He Jiankun signalled this on the fringes of the last international climate conference which took place in the Spanish capital Madrid, from 2 to 15 December. Jiankun forewarned that a tariff could strain relations with the People’s Republic. In the USA, too, the measure could be considered provocative and aggravate geopolitical conflicts.

One thing is certain; the real winners of this economic revolution will be energy companies. Because if the EU member states want to become climate-neutral by 2050, this already promises a boom for wind turbines, solar plants, bioenergy and future energies such as Power-To-X. Thousands of jobs have been created in the wind power industry in particular, as Siemens recently pointed out. In 2018, the electrical engineering company opened one of the world’s most modern wind turbine factories in Cuxhaven, following investments of around 200 million euros.

It is still unclear what the European Union’s path towards climate neutrality will look like. The European Council’s declaration explicitly states that “Some member states have declared that they use nuclear energy as part of their national energy mix.” Poland, for example, doubts that the goal of climate neutrality by 2050 can be achieved without nuclear power. Finland has found a solution for storage, which is why approval for nuclear power has been increasing since the second half of the year, and France is planning to build new nuclear power plants.