On the way to a climate-neutral economy, the steel industry plays an important role
by Hans Diederichs
With low-CO2 production processes and sustainable products, the industry is setting out to make a decisive contribution to achieving the climate targets. The prerequisite for this is a political framework that makes green steel production possible under fair conditions in Germany. The steel action plan adopted by the German government in the summer provides the right approaches for this, which now need to be implemented quickly.
However, a study by Prognos AG on behalf of the German Steel Federation has now analyzed the consequences for Germany as a business location if the decarbonization of the steel industry is driven solely by rising CO2 prices. For example, a unilateral increase in CO2 prices in the steel industry will inevitably lead to a decline in production and employment, especially in the primary steel route. This is associated with economic damage along the entire value chain. "Steel companies in Germany and Europe are currently facing a massive challenge. They are being challenged by increasingly ambitious climate targets without the necessary support framework being in place. The only way to achieve their climate policy targets in Germany is to introduce new low-CO2 production processes. If this transformation does not succeed, steel risks being produced in other regions of the world in the future with significantly lower climate protection requirements and then imported into Europe," explains Hans Jürgen Kerkhoff, President of the German Steel Federation.
According to the study, if the CO2 price in Germany is not increased in an internationally coordinated manner, a 40 percent drop in production in the steel industry is to be expected by 2035. In economic terms, this would mean a loss of around 200,000 jobs and 114 billion euros in value added. Added to this would be an increase in global CO2 emissions. "The economic costs per ton of CO2 shifted abroad amount to an average of 600 euros. This exceeds the higher production costs of a hydrogen-based process many times over. It is therefore economically more efficient for policymakers to support the steel companies concerned in their transformation to low-CO2 production processes," explains Dr. Michael Böhmer, Chief Economist Corporate Solutions at Prognos AG. Against this background, Association President Kerkhoff emphasizes: "If Europe is to take its global pioneering role in climate protection seriously, the political framework conditions must now finally be set in such a way as to offer a reliable perspective for low-CO2 steel production at the site. To this end, the transformation must be comprehensively financially supported and secured."
Source: WV Stahl Photo: worldsteel