Climate-friendly cement and steel production economical by 2045 – German govt report

The production of low emissions cement and steel is set to become cheaper than that of counterparts produced with fossil fuels before the middle of the century, according to a report by the Office of Technology Assessment at the German Bundestag (TAB). Prices for green steel and low emissions cement would rise towards the end of the 2020s before reaching cost parity in the mid-2030s and becoming cheaper than conventionally-produced materials by 2045. Climate-friendly chemicals, however, would remain permanently more expensive, the report estimated. Moreover, the authors add that international competition could make it difficult to maintain current domestic production volumes.

In 2023, 155 million tonnes of CO2 equivalents came from the industrial sector in Germany – over a fifth of the country's total emissions that year. The production of steel, cement, and basic chemicals accounted for over 40 percent of industrial greenhouse gases. If industrial goods are to continue to be produced in Germany, "the production processes used here, which are predominantly based on fossil resources, must be converted to new, climate-friendly manufacturing processes," the report reads. Cumulative additional investments worth almost 15 billion euros are needed to switch to low emission technologies, the report found. It added that policymakers need to support companies in the transformation process. Its aim was to "analyse the technical and economic realisation conditions for (near) climate neutrality by 2045" in the three most emission-intensive industries.

The report also illustrates the path to climate neutral production, which faces a double challenge: processes generally require large amounts of energy, while at the same time releasing CO2 during manufacturing. For the steel sector, decarbonisation would involve reducing iron ore with hydrogen instead of coke, which would require entire plants to be rebuilt. Another option would be to install carbon capture technology inside the plants. However, this would capture only around half of the emissions. For the cement sector, carbon capture and storage or use (CCUS) could make production more climate friendly, as well as reducing the proportion of clinker in cement. For the production of climate-friendly basic chemicals, the authors recommend replacing crude oil with low-emissions hydrocarbons from biomass, captured CO2 or recycled plastics.

Germany aims to become climate neutral by 2045. The government has introduced many measures to assist the country's industry in the transition and set internationally accepted standards.