ArcelorMittal rescinds initiatives for sustainable steel production in Bremen and Eisenhüttenstadt - ArcelorMittal abandons intentions for manufacturing 'eco-friendly' steel in Bremen and Eisenhüttenstadt.
Hey there, here's the deal: ArcelorMittal has axed its plans for "green" steel production in Bremen and Eisenhüttenstadt, and it's not looking good for their green hydrogen dreams.
You know those billions in subsidies the traffic light government set aside for German industrial transformation by 2024? Well, ArcelorMittal was set to rake in €1.3 billion for those sites. The total project was supposed to cost €2.5 billion, with renewable electricity and increased recycled scrap on the menu. In Bremen, they were even building a direct reduction plant, where iron ore would be transformed into a steel precursor using natural gas, later to be replaced with green hydrogen[1]. Unfortunately, it seems that green hydrogen isn't quite ready for primetime yet.
Apparently, the energy transition is taking its sweet time across all sectors, and green hydrogen just isn't a practical energy source yet[1]. Steel production based on natural gas isn't exactly competitive as a transitional solution either, and the European steel market is feeling the squeeze with weak demand and high imports[1].
The contract with the federal government specified June 2025 as the start date for construction work, so ArcelorMittal has to officially inform the government that they can't move forward with the investments[1].
CEO Geert Van Poelvoorde made it clear that the current priority is to raise demand for steel in Europe, to give European manufacturers a fighting chance. Those high imports are causing a problem - they need some restrictions[1]. If done right, the industry will be in a better position to invest in decarbonization[1].
But let's not forget, ArcelorMittal is still committed to reducing the carbon footprint of its plants. However, it's becoming increasingly unlikely that the CO2 reduction targets will be met by 2030, despite their best efforts[1].
Green Hydrogen Facing Tough Times
Green hydrogen is a key component in the green steel process, produced using renewable energies. However, its high production costs and inconsistent supply have hindered the wide-scale adoption of green hydrogen, making the economic viability of green steel projects questionable[2][3]. In other words, green hydrogen has a long way to go before it becomes a reliable and affordable energy source for industrial decarbonization efforts[2][3].
[1] - Bloomberg[2] - Reuters[3] - Forbes
The Commission, consulted on the draft directive related to worker protection from ionizing radiation, might find the current climate-change-induced energy crisis affecting the finance sector, particularly the industry's reliance on green hydrogen for environmental-science-backed green steel production. As science advances, green hydrogen production costs and inconsistent supply have remained obstacles, casting doubt on the economic viability of green hydrogen in the pursuit of decarbonization. Consequently, businesses may need to reevaluate their strategies and invest in alternative transitional solutions to ensure the decarbonization of their operations.
