German econ min considers EU quotas for green steel, cement and chemicals to drive demand

Using public procurement contracts and quotas for climate-friendly basic materials could help drive demand for climate-friendly products like green steel or cement, the German economy ministry said in a new concept on "green lead markets". The aim is for green products and processes to become increasingly competitive and for the markets to become self-sustaining in the medium to long-run. "Our vision is that a wind turbine made of green steel rests on a foundation made of green cement, and that an electric car is not only running CO2-free but also is made of green steel," said economy minister Robert Habeck. The Green Party-led ministry's concept includes clear definitions of green steel, cement and basic chemicals, which the ministry said will form the basis for labelling procedures accordingly and help to increase demand. Transparent and reliable information and definitions enable market players to distinguish climate-friendly raw materials and products from conventional and more polluting ones, the ministry argued. This would pave the way for fair competition at a time when climate neutrality is "increasingly becoming a competitive advantage and CO2 emissions a new international currency."

Among the possible instruments the ministry is considering to shore up demand are green public procurement bids, for example for the construction of government buildings. Other measures that could be implemented at the European level include the creation of binding requirements for the emissions intensity of raw materials and products or quotas for climate-friendly raw materials, said the ministry. This would mean the EU stipulates demand for a certain proportion of climate-friendly raw materials that are placed on the market or used in a specific end product as part of the ecodesign regulation.

The proposals are the result of an industry stakeholder process, which began last year, including manufacturers from the steel, cement and chemical industries, relevant customer sectors such as the automotive industry, construction industry, metal packaging or plastic pipes. They are not yet official government policy proposals. So far, government efforts have largely focussed on the supply side, such as through support for industry to convert production processes, or CO2 pricing. The government welcomed industry-led initiatives, such as the recently presented Low Emissions Steel Standards (LESS).