Eggert (Eurofer): “Europe risks producing less steel, but green. Hydrogen the future challenge”

Brussels – The steel industry needs hydrogen, which, however, is not there and must be found quickly, because otherwise, in the name of sustainability, there is a risk of losing European production capacity and the economic-trade game on the global market. Because, when it comes to competition, “there is not only China,” reminds Axel Eggert, Eurofer’s managing director. Europe’s “green” steel challenge will be the focus of the specially dedicated event by the European Commission in Italy, which will see Eggert himself among the protagonists. In his interview with Eunews, he reminds us that the sector still has a lot to offer, as long as we invest well and help in innovation. “If we lose research, we lose the opportunity to create new products.”

Eunews: The European Commission invests in research for green steel. Can such an initiative make a difference? How confident are you that this kind of EU funding can support the steel sector in effectively addressing the challenges of the green transition? Axel Eggert: “This kind of funding is crucial for the development and innovation of the industry. Funds are coming through the Horizon research program dedicated to industrial upgrading projects. Clearly, EU funds and grants are not only for renewables or steel decarbonization, but they are also for processes for using raw materials, exploiting the potential of steel as an element. Today we are already able to decarbonize almost completely from a technology standpoint but there is always something to be done and something to look at. For example, the use of hydrogen on an industrial scale for the steel sector has never been brought forward and needs to be supported. There is also a need for more research on a more efficient use of hydrogen. There is still a big difference between the traditional way of making steel and the potential that innovation offers.”

E: You referred to hydrogen. Do you think it is the best choice to produce energy for energy-intensive industries? If yes, is the EU able to ensure sufficient hydrogen production at a reasonable price for industrial consumers such as the steel sector?”

A.E. “If electricity could be used directly, it would be better. However, for certain types of industries, such as fertilizer, steel, and to some extent chemicals, we need hydrogen. We need it because there is no technology available to directly use electricity to melt steel scrap. So we need hydrogen, and the steel industry so far has the highest efficiency in using hydrogen, which means that per kilogram of hydrogen, we can reduce CO2 emissions more than any other industry. Of course, we need reasonably priced hydrogen so that we can remain competitive, and this is certainly a challenge for the coming years. So, support will be needed, including establishing markets. Prices are important if you think about, for example, competition with the United States, which is supporting the development of green hydrogen with the Inflation Reduction Act. In the United States, the cost to produce hydrogen will be almost zero, and the EU needs to go in the same direction. We need a price that is between 2 and 3 euros per kilogram of hydrogen to remain competitive.”

E: Can the EU make it?

A.E. “Certainly it is the challenge of the next few years, but once the hydrogen infrastructure network is established throughout Europe, the price will come down.”

E: What about the quantity of hydrogen?

A.E. “Will Europe have enough hydrogen? That’s also a challenge. Our industry is ready. We want to invest to increase its use and reduce the carbon footprint, but the hydrogen is not there. What little hydrogen we have comes from fossil sources, not only in Europe. Certainly, the infrastructure needs to be built, the pipelines need to be ready, we need electricity to produce hydrogen, and then we need storage points. The steel industry needs substantial supplies. Between now and 2023 we will need about 2 million tons of hydrogen for current projects alone. Indeed, natural gas can also be used, but we need hydrogen to completely reduce the carbon footprint. The Commission’s goal is to have 10 million tons of hydrogen produced in Europe by 2030 and another 10 million tons imported, which I think is too ambitious a target. If we can secure seven million tons of hydrogen it would be down good. But it is important for the industry to also use hydrogen as efficiently as possible.”

E: So, do you think that the Commission wanted too much sustainability and was too ambitious?

A. E. “If we want to lead the way and move ahead faster than others, then the right measures must be taken to safeguard production in Europe. That is what is important. If you have such a high CO2 price in Europe you have to make sure that at least steel imports meet the same incentives. Exactly what we are not doing. This way we risk a loss of industry in Europe.”

E: What does the Green Deal mean in practice for the European steel sector? Will we produce green steel or less steel in Europe?

A.E. “Both, the way the situation is today. We will produce less steel, but green. The problem is that in principle we have to completely reduce the carbon footprint by 2034 at the latest because free emission certificates are running out for the sectors covered by the Carbon Border Adjustment Mechanism (CBAM). This implies that without free certificates for installations, we can no longer decarbonize or we have to buy emission certificates on the market, but in 2034 we expect the price to be around 150-200 euros, which cannot be passed on to the consumer. If we want to decarbonize the whole industry within 2034 while maintaining the current production capacity in Europe, we need four million tons of hydrogen. This is complicated for the steel industry and affordable energy supplies. Without the right conditions, we will have to reduce Europe’s production capacity and consequently import more steel even at the expense of the environment, because we would have to buy it from countries that do not decarbonize at the same rates as Europe and its industry.”