The farewell to the blast furnace has long been sealed. It will disappear from the smelter site just like the coal dust. The steel industry is facing a gigantic change in technology.
Significantly fewer greenhouse gases need to be blown into the air to protect the climate, that is undisputed. In particular, carbon dioxide (CO2) emissions need to be reduced – and this is where industry is particularly in demand.
The steel companies have long understood the signals. Whether Thyssenkrupp, Salzgitter or ArcelorMittal: All of them are taking billions of euros into their hands to gradually produce largely climate-neutral by the middle of the century at the latest. If that succeeds, according to the German Steel Federation, up to seven percent of German CO2 emissions would be saved.
This becomes even clearer in the smallest federal state of Bremen, where ArcelorMittal produces flat steel in a plant. “This is extremely important for climate policy: around 50 percent of the CO2 emissions in the state of Bremen come from the steelworks,” said Bremen’s Prime Minister Andreas Bovenschulte (SPD), explaining the dimension. The plant produces 3.5 million tons of flat steel annually. From the sister plant in Eisenhüttenstadt in Brandenburg, two million tons are added each year.
Hydrogen instead of coal
So far, so good – or so bad from an environmental point of view: For each ton of steel there are on average just under two tons of CO2 with the previous production method. This is due to the use of coal, which is therefore to be replaced in the manufacturing process – initially partially with gas, but in the long term with hydrogen. For this purpose, blast furnaces will be shut down and replaced by so-called electric arc furnaces with an upstream special system, a “direct reduction system” (DRI) for iron ore pretreatment.
“The upcoming technological change in the steel industry is comparable to the change from internal combustion engines to electric drives in the automotive industry,” says Reiner Blaschek, outlining the mammoth task. The CEO of the two ArcelorMittal plants in Bremen and Eisenhüttenstadt names an investment amount of over one billion euros for the renovation. In normal operation, this corresponds to the investment volume of 20 years at both locations.
Competitors Salzgitter and Thyssenkrupp also want to gradually convert certain production proportions from coking coal to the use of “green” hydrogen in the coming years. Pig iron can be extracted from iron ore using hydrogen without releasing large amounts of the greenhouse gas CO2. In addition to elemental iron, which is then used for steel alloys, only water vapor remains.
Billions for “green transformation”
Germany’s largest steel producer, Thyssenkrupp, wants to produce steel in a climate-neutral manner by 2045 and replace the first of four blast furnaces in 2025 with a DRI system that works with hydrogen. The group estimates the cost of the first complete system at up to 1.2 billion euros. Another, larger system is to replace the second furnace in 2030. Until then, further investment costs of 1.1 billion euros are expected. A further 4.7 billion euros for the “green transformation” are then estimated by 2045, for a total of around 7 billion euros.
Competitor Salzgitter relies on its “Salcos” project. A year ago, the then Environment Minister Svenja Schulze (SPD) presented a funding check of five million euros, which will be used to build a DRI plant powered by hydrogen and natural gas. According to the company, the complete transformation from conventional to hydrogen-based steel production at Salzgitter is to be implemented in several stages by 2050. This means that the creation of CO2 in steel production can be reduced by up to 95 percent, they say.
But even a year ago, Lower Saxony’s Prime Minister Stephan Weil (SPD) saw two central questions: “How is it going and who is paying for it?” The first question has been clarified, the second is answered by the President of the Steel Federation, Hans Jürgen Kerkhoff, today as follows: «In order for the transition to succeed, a paradigm shift in energy and climate policy is required. Away from ever higher cost burdens, towards a political framework that sensibly supports the efforts of steel companies to decarbonise. “
Preventing a rude awakening
In plain language: If the steel industry is not adequately supported and relieved during the renovation and the high investments do not pay off, then there can be a rude awakening in the market. Blaschek from ArcelorMittal puts it this way: “If we don’t make these investments fly, that is, make them competitive, there is a risk that we will fall by the wayside. Then the European and German steel industry threatens to bleed out in installments. “
And that’s also due to China. The country is the largest steel producer and exporter in the world. Its production exceeded one billion tons last year – a share of 56 percent of world production. In 2020, China exported 51.4 million tons of steel, imported 37.9 million. Most of its steel, 58 percent, is used in the Chinese construction industry. For comparison: Europe produces around 160 million tons a year, Germany around 40 million tons.
China is also the largest producer of carbon dioxide in the world. The steel sector contributes 17 percent to its emissions – even more than energy production. The steel industry therefore plays a key role in achieving China’s declared goal of becoming carbon dioxide neutral by 2060.
Insist on fair trading conditions
Until then, the German and European steel manufacturers, who are already struggling with the steadily rising CO2 prices in emissions trading, are pushing for fair trading conditions that also include a “Green Border Tax”. This would be levied on steel imports that come from China, for example, and have not yet been charged with a cent of CO2 tax.
However, in the overall balance sheet, this is also a politically sensitive undertaking, because China is one of the main sales markets for German cars, among other things. So it is possible that the competitiveness of green steel will first have to be secured for a long time by German and European taxpayers in order to protect the climate.
“Part of the funding has to come from the federal government and the European level, part of which will be co-financed by the state. And we are absolutely ready for that, “says Bremen’s mayor, who in his city-state does not doubt a political majority for a moment:” The hut belongs to Bremen and Bremen belongs to the hut. “
As if to prove it, ArcelorMittal and the two energy groups swb and EWE received a sponsorship check for ten million euros in state funds from the Bremen Fund this Wednesday in Bremen. The money is intended for the largest industrial hydrogen project in Bremen, which marks the beginning of the decarbonization of steel production, it was said to justify.