Car associations stated that increasing demand for green steel by setting minimum quotas for carmakers was the wrong way to decarbonise steel production, according to Euractiv.
European car manufacturers opposed the idea of forcing producers to use a minimum proportion of green steel through EU legislation, as recently proposed by steelmakers, environmental groups, and German politicians.
“Managed trade for green steel should be avoided, and its use [should be] driven by the market.”
The idea is gaining momentum following the re-election of European Commission President Ursula von der Leyen in the European Parliament in July, where she mentioned plans to create “lead markets” for clean materials under the Clean Industrial Deal. However, the German auto industry said the problem was not a lack of demand for green steel.
The transition to green steel is a long-term project that should be promoted by supporting investment costs. There is no lack of demand, quite the opposite. Therefore, quotas do not solve the problem because they address the demand side, not the supply side.
According to IndustriAll’s analysis, while investment costs for clean steel production are supported mainly by national subsidies, European steel companies’ decarbonisation plans currently cover only half of EU primary steel production.
Blast furnaces subject to the Emissions Trading System (ETS) can currently produce 97.5 megatonnes per year. However, their decarbonisation strategy will only produce 54 megatonnes, calculations show.
In Central and Eastern Europe in particular, plans to switch from coal-based steelmaking to green steel were still only a “theory,” IndustriAll secretary general Judith Kirton-Darling stated on Tuesday, 5 September.
Green steel
According to Eurofer, the European steel association, the automotive industry is the second largest consumer of steel after construction. It accounts for 18 per cent of total EU demand. Alex Keynes, Cars Policy Manager at NGO Transport & Environment (T&E), said:
“The automotive sector uses more higher-quality, flat products […] that are traditionally most dominated by coal-based steelmaking. So there’s a real opportunity for the automotive sector, and particularly premium car brands, at least in the early stages, to really absorb the additional green premium.”
Achieving a quota of 40 per cent green steel by 2030 would add just €57 to the price of an electric vehicle, according to T&E calculations, which would be “negligible” compared to the cost of a new car.
Eurofer, meanwhile, estimates the additional production costs at €300 per tonne of green steel. The average car requires about one tonne of steel. Director general Axel Eggert stated:
If you want to have leather seats in the car, it costs you €2.000 extra. If you want the extra green steel, it costs you €300.
The additional costs will also depend on what counts as green steel, the EU-wide definition of which has not yet been agreed.
