Germany's steel industry “of geopolitical importance”, will receive subsidies – Scholz

The steel industry is “of geopolitical importance” for German industry and will therefore receive assistance from the government in mastering its transformation towards climate-friendly production with “substantial” subsidies, chancellor Olaf Scholz told industry representatives at a steel summit in his chancellery. “Steel production is indispensable for Germany,” Scholz said after promising steel companies to work towards more competitive energy costs in Germany and better trade conditions internationally.

The government’s aim was to save most jobs in the domestic steel industry, spokesman Steffen Hebestreit added. Electricity costs are a growing concern for steel producers in Germany and the government would therefore strive to cap fees in transmission grid to 3 cents per kilowatt, Hebestreit said.

After the collapse of his coalition government, chancellor Scholz depends on the consent of other parliamentary parties to pass many proposed laws, including on grid fees.

At the EU level, Germany would advocate for strengthening power price compensation mechanisms to keep the industry competitive across Europe in the coming years. Scholz also called for tighter controls and barriers for ensuring climate action standards are adhered to in international steel imports, a matter that the chancellor raised to debate at a European steel summit he proposed.

At the summit in Berlin, companies including ThyssenKrupp, Salzgitter, Arcelor Mittal and others met with the chancellor to debate the current challenges facing German industry, both over the difficult international market environment and Europe’s envisaged transformation towards climate neutrality. Tekin Nasikkol, head of the work’s council at ThyssenKrupp said Scholz “has seen the writing on the wall” and that the steel industry needed help to stay afloat, the Süddeutsche Zeitung reported.

The industry and its roughly 80,000 employees are grappling with high energy costs, dumping by foreign producers, and weak demand. At the same time, decarbonising industry will require billions of euros of investment to modernise factories and electrify production chains. The EU’s CBAM mechanism has been put into place to ensure that products made with lower environmental standards abroad are made subject to tariffs that compensate domestic producers for the higher costs associated with saving emissions.