2024-07-14 21:07:49
Green steel is expected to take German industry a long way towards climate neutrality. But how sustainable is production really?
It is hot and dirty, and the pig iron flows out of the blast furnaces like lava. Down at the plants, the employees work with the utmost caution and in clothing that protects them from the sweltering heat. This is everyday life in an industry that is indispensable for the economy and daily life: we are talking about the steel industry. Germany is the largest steel producer in Europe, and German households need around 180 kilograms of steel per capita per year.
But the steel industry is facing a major problem: Germany is to become climate neutral by 2045. Steel production is extremely energy-intensive, and so far coal and coke have been used in production. The industry is responsible for around a third of Germany’s CO2 emissions. In order to achieve the climate targets, the industry must change. Its hope: green steel. But this change is not easy. The change will cost billions and will probably take years, as important prerequisites are still missing.
The industry is already under massive pressure. It is suffering from the rising costs of fossil fuels and needs to cut costs: Thyssenkrupp recently announced a tough austerity program for its Steel Europe division. Thyssenkrupp is reducing production capacity at its main plant in Duisburg.
Germany’s largest steelworks is designed for a volume of around 11.5 million tonnes of steel. In the future, it will have a capacity of nine million tonnes. What consequences this will have for the division’s approximately 27,000 employees is still unclear.
ThyssenKrupp boss Miguel Lopez recently complained in the “Welt” newspaper that the steel division was currently a burden for the company. The reason: “Unfortunately, the appeal of our brand is not backed up by corresponding financial performance.” The finances are not where they should be. In almost all businesses they are below competitive levels.
Green steel could therefore become a beacon of hope.
However, steel produced with green hydrogen is still “pie in the sky” in Germany, says Andreas Fischer, economist at the German Economic Institute (IW). The industry still lacks the facilities to produce green hydrogen in Germany. They are currently only planned and have yet to be implemented.
How sustainable the product ultimately is also depends on the production chain. If every single step is low-emission – for example, the industrial plants are also powered by hydrogen – Germany could save up to 97 percent of emissions in steel production by using green steel, according to the expert.
“There are not many alternatives to hydrogen,” says Fischer. That is why the transformation of individual industries must take this path. From a technical point of view, it is not a problem to convert steel production to hydrogen. It is more a question of cost. According to Fischer, it is not yet possible to quantify exactly how expensive this will be.
The calculation also takes into account the extent and price of hydrogen imports. It is also unclear whether some of the preliminary products will be sourced from abroad and processed further in Germany in the future. Just on Thursday, Economics Minister Habeck signed a contract for hydrogen imports from the United Arab Emirates. From 2027, around 250,000 tonnes of green hydrogen are to flow from there to Germany. The price is around 4.50 euros per kilo.
Hydrogen is therefore central to ensuring that the transition to climate-neutral steel production works. The production of green hydrogen requires sufficient electricity from renewable energy sources, because this process is also energy-intensive. However, 44 percent of Germany’s electricity supply still comes from fossil fuels. “Germany must make progress in the supply of renewable energies so that companies have the technical ability to adapt their processes to them,” says Fischer.
According to Fischer, one thing is already clear: “We will have to make a lot of investments.” In order to make the steel industry climate-neutral, new plants must be built and fossil plants replaced. This is the only way the industry can succeed in securing jobs in the plants.