In the heat of the Next Generation EU and the recovery plans after the pandemic, the European steel industry took advantage of the momentum to try to accelerate the decarbonization of its business. The technology: green hydrogen. But since the announcements and sketches of 2021 and 2022, little progress has been made and, furthermore, the record results from previous years have already been left behind due to the weakness of demand and Asian imports. Given the difficulties of making the investment profitable, many projects on the Continent have been postponed, put on standby or are progressing more slowly than normal. Nobody wants to talk about cancellations, at the moment.
The objective of the European Commission with the REPowerEU plan is to achieve a green hydrogen production capacity of 10 million by 2030. And although Spain is one of the countries that is advancing the fastest in this industry, it is also one of the territories impacted by this brake on steel. green.
The most recognized case is that of the ArcelorMittal project in the Gijón steelworks, for which it has pre-awarded 450 million euros in aid from the Decarbonization Perte in exchange for an investment of 1,000 million. The company and administrations have been negotiating for two years in conversations that seem to have made little progress on the price of energy to produce at the Asturian facility.
And although it has made progress with agreements and declarations of interest in countries such as France – it has authorized aid of 850 million for an investment of 1,800 million – and Germany – incentives of 1,300 million -, the Luxembourg group admits that it still has a long way to go to to be able to manufacture green steel. Even the CEO in Europe of the listed company, Geert van Poelvoorde, admitted at the beginning of the year in an interview with the Belgian Trends that steel made with green hydrogen is too expensive and, for now, anti-competitive.
But ArcelorMittal, the second largest producer on the planet, is not the only company that is advancing at a slower pace than expected. Without going any further, the Spanish Celsa, the sixth largest steel company in Europe (excluding Russia and Turkey), postponed from 2025 to 2027 a project to build, together with Statkraft, the first phase of a green hydrogen plant with which to feed its Norway located in Mo i Rana.
They are not the only initiatives with a Spanish presence that are not progressing according to the planned schedule. Little is known about the agreement between Iberdrola and H2 Green Steel with a promised investment of 2.3 billion to build a new factory in the Iberian Peninsula that was announced in December 2021. According to the initial plans of both companies, production was to begin in 2025 or 2026. However, not even the name of the final location of this future facility has been communicated.
Another of the large firms that has chosen to rethink its strategy is the German Thyssenkrupp. He admitted this in October, which cost him a 4% drop in the stock market. “We continually study the best, and most economically viable solutions under current conditions to make Thyssenkrupp’s steel business climate neutral in the long term,” he said in response to information from Handelsblatt, which pointed out the idea to stop a 3 billion euro green hydrogen project in the country. And between the German Government and the State of North Rhine-Westphalia, they provided around 2,000 million in financing.
Behind the brake on projects is the high cost of producing steel with green hydrogen. This was admitted by Jeremy Rifkin himself, advisor to the European Commission and one of the great defenders of technology, in a recent interview with elEconomista.es: “We are dealing right now with profitability problems. We put a multimillion-dollar effort into it. “There’s been a lot of talk about it and it’s still expensive, but it’s about to escalate.”
In fact, German Economy Minister Robert Habeck asked the EU for a seven-year delay in some rules on the implementation of hydrogen to ensure a slower transition to guarantee demand. And steel is going through its own crisis, as can be seen in the results of the large companies of the Old Continent.
In an open letter issued in October, the sector’s European employers’ association, Eurofer, warned that the industry “is going through its worst period since the 2008 crisis.” Beyond the weakness of demand in the Old Continent, “this is due to the impact of global steel overcapacity and unfair trade – in reference to the overproduction of subsidized steel in China and other Asian countries -, which amplifies the impact of the low demand for steel and high energy prices in the EU,” he added. Without “taking urgent action,” “it will be difficult to invest in ambitious decarbonization projects until 2030 and beyond.”
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