Trier. Federal Chancellor Friedrich Merz sees the transformation of the steel industry towards “green steel” on the right track. “This is encouraging for Germany,” said the CDU politician during a visit to the Dillinger Hütte in Saarland. In Saarland, the transformation to produce more climate-friendly steel is in full swing.
“If we want to remain an industrial country – and we have to remain an industrial country in order to maintain our country’s prosperity – then we need our own steel production in Germany,” he said. “We can modernize these basic industries in a climate-friendly way and we can also keep them competitive.”
Away from coal and towards hydrogen: In Saarland, the steel industry is being converted to produce more climate-friendly green steel. The aim is to reduce CO2 emissions. The transformation on the Saar costs around 4.6 billion euros. The federal and state governments are funding the project with 2.6 billion euros - the companies themselves pay the rest.
In addition to Stahl-Holding-Saar (SHS), large steel manufacturers such as Thyssenkrupp in Duisburg and Salzgitter AG in Lower Saxony are working on conversion projects. The steel industry is one of the largest CO2 emitters in Germany, so its restructuring plays an important role in achieving climate goals.
In Saarland, the transformation is “currently on schedule,” said an SHS spokeswoman. There is a lot going on on the construction sites in Völklingen and Dillingen: “The first structures have been completed and building construction has begun.” Commissioning is planned for 2028/29.
Steel is usually described as “green” when it is produced with hydrogen instead of carbon that is produced in the most climate-friendly way possible. This means that instead of coal as an energy source, hydrogen is used, which is obtained from renewable energies such as wind power or solar power.
In so-called direct reduction plants, hydrogen can replace the coal and coke used in classic blast furnaces to remove oxygen from the iron ore. If no climate-damaging carbon dioxide is produced during production, the steel is called “green”. Hydrogen plays a central role in the production of green steel as it replaces coal and coke.
The example of Saarland shows the potential: The new plants in Dillingen and Völklingen are expected to reduce CO2 emissions by up to 55 percent by the beginning of the 2030s: 4.8 million tons per year. CO2 neutrality should be achieved in 2045. Natural gas is used initially, then hydrogen later.
It is the largest decarbonization project in Europe, said Stefan Rauber, chairman of SHS. “The era of CO2-reduced steel production begins.”
Hydrogen is currently significantly more expensive than fossil alternatives. Experts assume that costs will fall, but in 2030 green hydrogen will probably still be at least twice as expensive as gray hydrogen produced from natural gas.
Green steel is therefore significantly more expensive than conventionally produced steel. Experts question the economic viability of CO2-reduced steel production – even with government funding. And: There is currently not enough green hydrogen available.
Construction of a hydrogen pipeline between Dillingen and Leidingen on the French border began in Saarland in August: The site is to be connected to the cross-border hydrogen network “mosaHYc”. From 2029, the Dillinger Hütte will be supplied with 6,000 tons of hydrogen annually. In addition, Dillingen will be connected to the German hydrogen core network in 2032/2033, says the SHS.
Another hurdle for the German steel industry are imports of cheap steel from non-European countries, which is often produced under less strict environmental regulations.
To protect the domestic steel industry, the EU Commission has issued a regulation effective July 1st to protect the European steel market from cheap steel imports. The aim is to limit these imports and at the same time make them more expensive.
The creation of green lead markets is also urgently needed: These should promote demand for CO2-reduced steel through public contracts, for example in construction in the rail network.
The Chancellor praised the fact that Stahl-Holding-Saar is participating in the German startup “Y-SIC”. This company has developed a patented process for the production of high-purity silicon carbide. This material is primarily needed by the semiconductor industry and is scheduled to be produced in Dillingen next year.
This is “further evidence of a realization that should give us all courage: the transformation of our economy is taking place today while many are still considering or even doubting whether it can even succeed,” said Merz.
