By Marie Mannes, Greta Rosen Fondahn and Nick Carey<\/p>\n
STOCKHOLM\/LONDON, March 3 (Reuters) – Buying expensive steel made with a nascent technology fuelled by green hydrogen that barely exists yet?<\/p>\n
That is the prospect facing Europe’s automakers, already under pressure from intensifying Chinese competition, under \u200cEuropean Union plans aimed at bolstering the bloc’s steel industry and still hitting its environmental targets.<\/p>\n
In December, the EU shifted to a \u200c90% cut in CO\u2082 emissions for all new cars from 2035 from an earlier 100% – dropping a full ban on combustion\u2011engine vehicles, which the industry had opposed due to the slow uptake \u200bof electric cars.<\/p>\n
EU WANTS TO BOOST EUROPEAN STEEL SECTOR<\/p>\n
Under the new proposal, tied to the EU’s Industrial Accelerator Act due to be presented on March 4, automakers, which account for a fifth of Europe’s steel demand, must compensate the remaining 10% through low\u2011carbon steel and alternative fuels.<\/p>\n
The catch? European “green steel” projects have increasingly been delayed, paused or cancelled, as green hydrogen made with the use of renewable energy is proving expensive and not yet available at scale.<\/p>\n
When available, such steel is \u200cexpected to cost about a third more than \u2060the conventional product, according to pure-play green steel hopeful Stegra.<\/p>\n
Confronted with such economics, steelmakers including ArcelorMittal and Salzgitter are pivoting to scrap\u2011based output. Others, most notably Thyssenkrupp, are renegotiating subsidy terms with Brussels.<\/p>\n
Data from the Leadership Group for Industry Transition – \u2060an initiative gathering governments and global companies – showed planned annual green steel capacity reaching around 28 million tons by 2050. Reuters calculations, however, show that only a third of that capacity is under construction. Around 18 million tons of planned capacity would be in Europe.<\/p>\n
“We don’t really have hydrogen available – at least not in the \u200bscale needed,” \u200bArcelorMittal CFO Genuino Christino told Reuters last month.<\/p>\n
Germany’s auto lobby has criticised the EU’s \u200bplan.<\/p>\n
“This means that our industry is once again dependent on \u200cdevelopments over which it has no influence,” VDA president Hildegard Mueller said in December.<\/p>\n
Nearly a dozen executives and experts across the automotive and steel industries told Reuters they expected Brussels to introduce policies to create a new market for low-emission steel and encourage demand. Most expect only limited detail in the initial proposal, with key elements delayed.<\/p>\n
“There’s confusion amongst a lot of people after the Commission’s proposal, trying to understand … what’s realistic, what the market would actually look like,” said Chris Heron, secretary general of E\u2011Mobility Europe.<\/p>\n
DEFINITION ‘WILD WEST’<\/p>\n
Another challenge is the absence of an agreed definition of green, or low\u2011carbon, steel. One \u200csteel executive described today\u2019s market as a “wild west”. Reuters has found companies use varying \u200bterms, metrics and thresholds to market their lower\u2011emission products.<\/p>\n
Switching from coal\u2011based blast furnaces to hydrogen\u2011based \u200bdirect reduced iron (DRI) systems and electric arc furnaces (EAF) involves investments of \u200bbillions of euros.<\/p>\n
Many steelmakers are instead pivoting to a more cautious, step\u2011by\u2011step strategy, centred on the electric arc furnaces, which \u200ccan initially run on scrap before switching to hydrogen-based DRI.<\/p>\n
Scrap\u2011fed \u200bEAFs emit far less carbon than blast \u200bfurnaces, but many industry players say they cannot be the long\u2011term solution because high\u2011quality scrap is limited.<\/p>\n
Automakers are adjusting, too.<\/p>\n
Volvo Car, which had aimed to start using hydrogen\u2011based steel from 2027 from SSAB, has agreed to begin using scrap\u2011based fossil\u2011free steel, later shifting to hydrogen\u2011based supply \u200bonce production is in place.<\/p>\n
“We believe that there will \u200cbe a demand,” said Christian Levin, CEO of Traton’s Scania. “(But) we are not commercially offering it yet and we are not \u200byet buying it because it is not yet available.”<\/p>\n
(Reporting by Marie Mannes, Greta Rosen Fondahn and Nick Carey; Writing by Christoph \u200bSteitz and Marie Mannes additional reporting by Javi West LarranagaEditing by Tomasz Janowski)<\/p>\n","protected":false},"excerpt":{"rendered":"By Marie Mannes, Greta Rosen Fondahn and Nick Carey STOCKHOLM\/LONDON, March 3 (Reuters) – Buying expensive steel made…\n","protected":false},"author":2,"featured_media":802949,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[5174],"tags":[25233,146573,232628,2000,299,5187,1699,5452,226134,1309,142164,25541],"class_list":["post-802948","post","type-post","status-publish","format-standard","has-post-thumbnail","category-eu","tag-arcelormittal","tag-carbon-steel","tag-electric-arc-furnaces","tag-eu","tag-europe","tag-european","tag-european-union","tag-green-hydrogen","tag-green-steel","tag-hydrogen","tag-steel-demand","tag-steel-industry"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/116169758261026332","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/802948","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=802948"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/802948\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/802949"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=802948"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=802948"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=802948"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}