German steel industry calls for delay of green hydrogen switch

The German steel industry, which is central to Europe’s plans to establish a green hydrogen economy, is calling for postponing existing deadlines for using the climate-neutral gas, reported business daily Handelsblatt. “We expect the German government to open up the previously rigidly prescribed use of hydrogen,” said Thomas Bünger, CEO of Arcelor-Mittal Germany. Other steelmakers have also started corresponding negotiations with the government, the newspaper reported.

Germany has pledged seven billion euros in state support to make the country’s steel industry climate-friendly. To achieve that aim, the industry has promised to build plants that first run on natural gas and switch to green hydrogen later. The subsidy rules involve binding dates for the fuel switch, but the companies are concerned that green hydrogen will be more expensive than originally thought, and might not be available in sufficient amounts. Sticking to the previously agreed start of hydrogen use would lead to high costs and result in uncompetitive steel, Bünger argued.

Some companies even consider abandoning their plans for hydrogen usage altogether, Handelsblatt reported. Instead, Arcelor-Mittal is currently weighing the option of importing sponge iron, a raw material for steel production, the article said. This would endanger the build-up of a European hydrogen economy, since the European Commission and Germany planned with the steel industry as future bulk buyers of hydrogen, wrote Handelsblatt.

Green hydrogen is set to play a crucial role in the decarbonisation of many hard-to-abate sectors, such as steelmaking. But Germany is unlikely to cover the entire projected demand with local production.