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German "alliance for steel" aims to revive the national steel industry

by David Fleschen

Punitive tariffs, stricter climate regulations, overcapacities: Despite the recent recovery in demand, the German steel industry still faces major challenges. This is why the ministers of economic affairs of the federal states of Brandenburg, Bremen, Hamburg, Lower Saxony, North Rhine-Westphalia and Saarland want to relieve the national steel industry - and aim to work on a so called “alliance for steel”.

Chairwoman of the National Steel Summit is Anke Rehlinger (German social democratic party) who hosts the first conference of six German ministers of economic affairs in her home state Saarland. The aim of the new German steel-alliance is to reduce the financial burden for steel makers, when adapting to new legislations to reduce CO2. For example, financial support could be given to steel producers for introducing environmentally friendly production technologies.

Already for a long time, many steel manufacturers have been complaining that the recent significant increase in emissions trading costs deprives them of important funds for research and development. Within the past year, the price per ton of CO2 increased significantly from 8 to 18 euros. The steel industry is particularly affected by this: Because energy sources such as coking coal are often fired during production, much of the climate-damaging carbon gas is produced.

Already a lage numbe of German manufacturers are researching various technologies in order to significantly reduce carbon dioxide emissions during production. Just a few weeks ago, for example, Thyssen-Krupp presented the "Carbon2Chem" project, in which the greenhouse gas is intercepted and converted into other products that can serve as a basis for fertilizer or fuel. The Lower Saxon manufacturer Salzgitter wants to replace coking coal with hydrogen, as well as the Austrian Voestalpine and the European subsidiary company of Tata.

Still, introducing new technology still faces many challenges. Firstly, it will take many more years before clean technologies can be used. Secondly, the necessary research expenditures, higher energy costs as well as increasing costs from the CO2 emission trading trade burden the companies several times until realization.

In addition, there is competition from abroad: Because many manufacturers in the emerging markets can produce under significantly more favorable conditions, it is difficult for German companies to survive the global price war. In order to achieve financial compensation, industry representatives are discussing a type of carbon tax that can be used to obtain foreign products that have been produced under environmentally damaging conditions.

Upon request, Rehlinger stated that the steel alliance is a "strategic partnership" of the steel-producing federal states. "The steel industry is an important primary industry, which is important for many downstream manufacturing processes," said the Minister. "If you want re-industrialization, you need a globally competitive steel industry."

Source: Handelsblatt, photo: fotoalia

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