en.Wedoany.com Reported - Economists at the University of Mannheim (Universität Mannheim) have found in a study that producing carbon-neutral steel in the German steel industry is not a loss-making business. Despite significant investments, companies can remain economically competitive, but this requires the right policy framework.
The study, funded by the union-affiliated Hans Böckler Foundation (Hans-Böckler-Stiftung), shows that the transition to carbon-neutral production in the German steel industry requires a long-term cap on industrial electricity and hydrogen prices. Additionally, the state must provide subsidies for investments in carbon-neutral production, linked to location commitments. Study authors Tom Krebs and Patrick Kaczmarczyk propose several concrete measures to preserve the competitiveness of the German steel industry.
The researchers recommend that by 2035, all energy-intensive companies should benefit from a guaranteed industrial electricity price of €60 per megawatt-hour, including grid fees and all surcharges. For companies with collective wage agreements, the price could be reduced by an additional €10 per megawatt-hour. Regarding hydrogen, the study proposes a guaranteed purchase price by 2035, with industrial hydrogen priced at approximately €140 per megawatt-hour, also applicable to all energy-intensive companies. Companies with collective wage agreements could receive an additional discount of €20 per megawatt-hour.
The study also emphasizes the need for targeted investment promotion. Steel companies investing in future production facilities and providing site and job guarantees should receive direct subsidies or low-interest loans amounting to 50% of the investment, with a slightly higher subsidy rate for companies with collective wage agreements. Additionally, government orders should be prioritized domestically, and state equity participation in strategically important steel companies to reduce capital costs is also considered a viable option.
The researchers point out that the four instruments—energy price guarantees, investment promotion, demand stimulation, and public participation—are necessary conditions for achieving the economic viability of the low-carbon transition, with energy price guarantees having the greatest leverage effect. They emphasize that carbon-neutral steel production is a viable business model, but only if policies deliver on their promises.
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