German steel, chemicals industry lament lack of support for net-zero transition
The German government wants to help the steel and chemical industry become climate-neutral, but the promised support falls short of what industry actually needs, Klaus Stratmann and Kevin Knitterscheidt write in Handelsblatt. Of the seven billion euros that are reserved in the economic stimulus package for the implementation of the National Hydrogen Strategy, only 2.5 billion is earmarked for the transformation of the steel and chemical industries, according to a letter written by state secretary Thomas Bareiß from the energy ministry to the chairman of the parliament budget committee. How the amount will be divided between the two sectors is not clear at this stage. The funding would be "based on suitable projects proposed by the companies", the energy ministry told the authors. In addition, the ministry plans to exempt electricity used in green hydrogen generation from the renewables surcharge to make the process more competitive.
The promised subsidies do not meet the needs of companies, according to the article. The steel industry in Europe will have to invest around 30 billion euros to make its own production processes climate-neutral, think tank Agora Energiewende estimates. The largest German steel producer Thyssenkrupp alone is expecting an annual investment volume of ten billion euros to renew its plants and equipment.
The industry is disappointed with the promises made by politicians so far. "The establishment of a functioning hydrogen economy is essential for a climate-neutral steel industry. It is of great importance for the steel companies that the federal government quickly introduces measures that will enable a switch to low CO2 production processes and secure the significantly higher operating costs of hydrogen-based steel production", said Hans Jürgen Kerkhoff, President of the German Steel Federation. Frank Schulz, head of steelmaker Arcelor-Mittal's operations in Germany, calls the 2.5 billion euros promised by the German government a "good start to boost investment," but adds that significantly higher funds are needed for the transformation.
In the effort to lower emissions, hydrogen made with renewable electricity is essential for sectors such as steel, cement and chemicals, which cannot be powered by renewable electricity alone. Germany has launched a hydrogen strategy with the view to becoming a world leader in this new technology.