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Deep decarbonisation of the steel industry: a regional perspective

Panel: 9. Deep decarbonisation of industry

Authors:
Sven Alsheimer, Fraunhofer Institute for Systems and Innovation Research ISI, Germany
Elisabeth Dütschke, Fraunhofer ISI, Germany

Abstract

Deep decarbonisation of the steel industry is crucial in achieving Germany's CO2 emission reduction targets and becoming greenhouse gas neutral by 2045. The steel industry is responsible for 30% of industrial and 6% of total national emissions. At the same time, as a basic material industry, it is an integral component of national as well as regional value chains. Despite the resulting economic and societal importance of the steel industry for neighbouring regions, e.g. in terms of employment or regional identity, there is only limited research on the societal aspects of industrial low-carbon transitions from a regional perspective. With this study, we aim to contribute to this field by examining the wider societal perspective on transition processes in the steel industry on the regional level.

As part of a case study on the transition to hydrogen-based steelmaking in Germany, we conducted 16 in-depth interviews with selected representatives of industry actors, associations, knowledge institutes and regional actors. The selection of the interview partners was informed by previous data collections with experts within the project team and focused on relevant actors in Germany and the region under study. The interviews were semi-structured and the field phase was between September and October 2021. Based on the interview study, we investigate perceptions on opportunities and risks of decarbonising the steel industry using hydrogen direct reduction. Furthermore, assumptions on the societal impacts of the studied transition process on neighbouring regions are derived. Finally, we provide insights on drivers and barriers for successful regional transition processes in the steel industry.

We find that, overall, the interviewed actors assess the future transition to hydrogen-based steelmaking positively. Main opportunities stated in the interviews are its contribution to emission reduction and to securing the future of the steel industry in Germany and the respective regions. Regarding the societal impacts on neighbouring regions, the interviews provided mixed results: Some respondents emphasized the risk of carbon leakage if industry relocated to other countries. In this case, negative economic impacts on the regional level are anticipated. Others perceived the transition as a necessary step to secure competitiveness of the site and the local industry in general. Some interviewees further described the transition as a flagship project that provides positive marketing for the region. This assists the recruitment of new types of employees, which is necessary, since old and new facilities will be operated in parallel, resulting in a simultaneous need for employees for both systems.

Further findings from the interviews identify the drivers for the transition on a national and regional level. Nationally, pressure from society, politics and consumers is regarded as a main driver. For a successful regional transition process, the support by federal and municipal governmental actors is seen as an important factor. Barriers, on the other hand, are seen in terms of the availability of green hydrogen and resources as well as the lack of profitability in the starting phase of the transition. Furthermore, the (local) acceptance of the infrastructure for hydrogen-based steelmaking as well as the support of employees and unions is considered as crucial. Since the acceptance by these actors cannot be assessed conclusively on the basis of this interview study, further research should thus take a closer look on these groups and their perceptions on transition processes in the steel industry.

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