00:01Steel is essential to many industries.
00:04Global production now tops 1.8 billion tons a year.
00:08But that comes at a cost.
00:10The sector is undergoing a major technological shift,
00:13while also finding itself at the center of global trade disputes.
00:18China's steel exports have nearly doubled in five years.
00:22In Europe, cheap Chinese steel is threatening thousands of jobs.
00:26Meanwhile, the EU is pushing green steel.
00:29How do these two fit together?
00:34Blast Furnace 1 at Thusenkrupp.
00:36The company produces nearly 25,000 tons of pig iron every day at its Duisburg site.
00:42What you see here in the background is a classical blast furnace, a very modern one.
00:48Modern might be a bit of a stretch.
00:51This furnace was built more than 50 years ago in 1973.
00:55It's been upgraded many times since to reduce environmental damage.
00:59That's the job of Vedinga's team.
01:01But even the best retrofitting can't eliminate the CO2 emissions of such aging furnaces.
01:08We use coal and coke in order to get the reduction process.
01:12And this is where the CO2 comes from, which we want to avoid in the future.
01:17Doing that means shutting down all the company's blast furnaces.
01:21Together, they emit around 20 million tons of CO2 each year.
01:25And that's despite reduced output.
01:28Thusenkrupp has cut production from 11.5 to 9 million tons of steel annually.
01:34It also plans to eliminate or outsource over 10,000 jobs.
01:39The company is in crisis, like much of Germany's steel industry.
01:44The Stahl industry in Germany is confronted with a trias of challenges.
01:51Carsten Rippe represents the German SEAL sector.
01:55She says the problems start with high energy prices and continue with weak demand.
02:00And then, especially in Europe, the steel industry is flooded with cheap imports from the Middle East.
02:08That's also where the world's top producers are.
02:21In 2024, more than half of global steel came from China.
02:25Over one billion tons.
02:27And more and more of it is being exported.
02:34It is sometimes so that in Europe,
02:37Stahlmengen to prices,
02:41that don't even have European production costs.
02:45I think that you should say that a large part of the exports from China
02:51to Europe is on dumping.
02:55Dumping or not.
02:56That's now up to the World Trade Organization to decide.
02:59The EU has accused China of subsidizing steel exports through third countries.
03:04China is now fighting back against EU anti-dumping tariffs.
03:08How expensive can, may and should steel be?
03:12Prices are volatile and harder to predict than ever.
03:15That's a problem not only for producers, but also for mid-sized businesses.
03:22Like this building materials supplier south of Berlin, which has to stock steel.
03:28But how much?
03:29But how much?
03:34The current material is at around 1,4 million.
03:41Heinecke has to decide how much steel to buy and at what price.
03:45Not an easy call.
03:47The steel prices affect almost every sector.
03:57From construction and infrastructure,
03:59to car manufacturing and renewable energy.
04:16And what about new US tariffs?
04:21German firms worry that if cheap Chinese steel is locked out of the US,
04:26even more of it could be redirected to Europe.
04:29Even more of it could be redirected to Europe.
04:33So what's Europe's plan?
04:52The industry is making a big leap.
04:55Traditional blast furnaces, which produce pig iron from iron ore, coke and coal,
05:00are being phased out.
05:02The goal is to cut emissions using new technology.
05:06Direct reduction plants use hydrogen instead of coal or coke.
05:10The only by-product is water.
05:12And no CO2.
05:14A big step forward for the climate.
05:18Currently, steel production globally contributes 8% to global greenhouse gas emissions.
05:25Falco Ockerhardt is a researcher in climate economics at the Potsdam Institute for Climate Impact Research.
05:35He believes change in the steel sector is long overdue and that the current crisis is pushing it forward.
05:39There's too much producing capacity coal based for steel on the planet.
05:45Steel companies are under pressure.
05:47So they had to move.
05:48So green steel is actually their chance to advance.
05:51Green steel is produced with significantly less CO2.
05:55That's why many German plants are now being converted.
05:59Including those at ThyssenKrupp.
06:01We will not change in one go because this is the biggest steel plant in Europe.
06:07We will be starting with switching off first one then two blast furnaces when we have the new plant ready.
06:15And the whole transformation will certainly take a long time.
06:18But we are confident to start commissioning in 2027 for the new plant already.
06:24The first direct reduction plant is already under construction in Duisburg.
06:29It's being funded in part by nearly 2 billion euros in taxpayer subsidies.
06:35Germany is restructuring its steel sector and investing heavily.
06:40So far nearly 7 billion euros in public funding has been committed.
06:44We are indeed front runners in Europe.
06:48Most of the green hydrogen projects that are announced are in Europe.
06:52The European Commission provided subsidies.
06:57Germany is providing subsidies.
06:59And steel makers in Germany but also across Europe are intending to transform.
07:07Billions have already been pledged.
07:10And during a visit to ThyssenKrupp, EU Industry Commissioner Stéphane Cédroné said more support is coming.
07:17There will also be the desire to put money on the table,
07:23and therefore the innovation fund, 150 billion euros,
07:28which will be proposed with a part in guarantee and a part in subvention.
07:34But the transition carries risks.
07:37For industry and for taxpayers.
07:39There are many open questions, like where will the hydrogen come from?
07:44This is a very good question.
07:46Getting sufficient hydrogen is a challenge, particularly certainly in Europe and in Germany.
07:51It's a challenge that consists out of the situation of the pipeline network has to be built,
07:56the production facilities have to be built, and at the end of the day it needs to arrive here
08:01at the location at an affordable price.
08:04Hydrogen pricing remains unpredictable.
08:07But it will be a key factor in the cost of green steel.
08:10A study commissioned by the German Hydrogen Association shows that at 7 euros per kilo,
08:16hydrogen becomes the largest cost driver in steel production.
08:23That's just one of many factors that will determine the price of steel.
08:28For the building's materials supplier south of Berlin, none of that change is visible yet.
08:34Stefan Heinecke is still guessing what comes next.
08:37Stefan Heinecke
08:39Bisher is so, that the green steel is neither asked,
08:43nor that we have in any form in any form green steel.
08:48Yeah, the question at the end of the day is,
08:50in the way we can do it with the rest of the world then,
08:55if we have in Europe or in Germany the only ones that are green steel,
09:01but that is unbearably expensive,
09:03as in China produced steel,
09:05according to the original methods.
09:07The steel price war is already creating tensions between trading partners.
09:12And this is before green hydrogen-based steel even hits the market.
09:19European producers say they're at a disadvantage.
09:23Unlike many competitors, EU plants must pay for their CO2 emissions,
09:28by purchasing CO2 certificates.
09:32The CO2 price on the classical production,
09:36it's one of the drivers to move for green production, certainly,
09:39but it's also a potential concern for market distortions,
09:43because if the rest of the world doesn't have to bear these costs,
09:47we certainly have a great disadvantage.
09:49That's the reason why it's so important to have a regulatory framework,
09:53so that we don't have a disadvantage against steels
09:56which don't have to bear these costs.
10:01The steel industry says there are still too many loopholes.
10:05But the EU's new steel and metals action plan is set to close some of them.
10:10Since April 1st, there are increased trade political measures,
10:17which are the safeguards measures, and we are very grateful.
10:23So there will be more protection from cheap imports.
10:27But one question remains.
10:29Who will actually buy climate-friendly green steel
10:31if it ends up costing even more than regular European steel?
10:35The EU commissioner has an answer for this, too.
10:40Demand will be generated through new EU regulations.
10:44Since the end of this year,
10:46we will introduce a minimum of clean steel and made in Europe
10:50in the public markets
10:52so that we will open the clean steel demand made in Europe
10:56for companies like yours.
11:00So when will truly green, CO2-free steel become reality?
11:03No one knows for sure.
11:05But there is a short-term workaround.
11:08Actually, it is a fortune that direct reduction plans
11:12can run with natural gas.
11:15That means that you can transform the steel industry
11:18and at the same time don't need to use hydrogen from the start.
11:23You can start with natural gas.
11:25And emissions can be reduced by two-thirds, roughly,
11:29only by switching to this new technology and running them on natural gas.
11:35When steel will be produced entirely with hydrogen
11:38and without emissions is still uncertain.
11:41But researchers say the transition itself is what matters.
11:46If the new technology works in Europe,
11:49it could offer the world an alternative to building new,
11:52high-emission blast furnaces.
11:54India, for instance, they don't want to import steel from China.
11:58They want to build up their own steel industry.
12:01And they want to do that with the established cheap technology.
12:07And that is coal-based steel.
12:08So that's why there's actually the severe risk of new coal-based steel capacity
12:16that has a lifetime of at least 40 years
12:20and would increase this 8% of emissions contribution.
12:24And that is what we call the risk of a carbon lock-in.
12:27So India alone could, with this lock-in,
12:32let our global climate targets slip out of reach.
12:38In short, the way we produce steel
12:41will shape the future of the climate crisis.
12:43How many fires, floods, droughts and extreme weather events
12:54will future generations have to endure?
12:57The answer depends at least in part on the steel industry.
13:01Will Europe manage to cut steel's massive CO2 emissions?
13:07What do you think?
13:08Is Europe on the right track with its steel policy?
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