ArcelorMittal: High energy and hydrogen costs complicate decarbonization in Germany

Tuesday, 21 May 2024 12:35:39 (GMT+3)   |   Istanbul, Istanbul

Luxembourg-based steelmaker ArcelorMittal is urging the German government to implement a clearer policy on green transition in order to continue its decarbonization efforts in Germany.

According to the steel giant, despite the EU-approved funding from the German government for the planned decarbonization of its Bremen and Eisenhüttenstadt plants, it is still facing challenges, due to high energy and hydrogen costs. The company will make its final investment decision on decarbonization projects in Germany based on competitive energy prices.

ArcelorMittal highlighted that internationally competitive renewable energy prices and sufficient hydrogen supply in the long term are the only way to achieve carbon-free steel production in Germany and that natural gas will go a long way to help significantly reduce emissions during the transition process.

“Decarbonizing our production is a top priority for us, but the current costs and future price forecasts for energy and hydrogen pose a significant challenge,” Dr. Thomas Bünger, head of the Bremen and Eisenhüttenstadt plants, commented.

In the meantime, Lutz Bandusch, vice president of ArcelorMittal Europe, stated that renewable energies need to be rapidly expanded and that domestic hydrogen production should be established, while simultaneously increasing hydrogen imports so as to be successful in the transformation.

Currently, the hydrogen price for carbon-free pig iron production is €7-9 per kg. Yet, it needs to be about €2 per kg in order to be competitive. Due to high electricity prices, it is difficult to operate electric arc furnaces economically in the long run.

Taking these factors into consideration, the company pointed out that government measures have to guarantee sufficient green electricity and hydrogen at internationally competitive prices in the long term.

ArcelorMittal will construct a direct reduction plant and three new electric arc furnaces to replace two of the three blast furnaces and two of the four basic oxygen furnaces at its German plants, as SteelOrbis reported previously.

It plans to cut its carbon emissions in Europe by 35 percent by 2030 and to become carbon-neutral worldwide by 2050.