German Steel Federation Embraces New Government Strategy with Cautionary Optimism
On 14 April 2025, the German Steel Federation WV Stahl welcomed the newly signed Coalition Contract between the conservative CDU party, the social-democratic SPD party, and the Green Party. This agreement, which outlines the key priorities for the incoming government, has been closely watched by industries, especially the steel sector, due to its potential impact on power prices, industry competitiveness, and sustainability measures.
WV Stahl, the body representing the steel industry in Germany, has highlighted its approval of the agreement’s focus on energy pricing and the intention to lower power prices and associated grid fees. These elements are critical, as the federation argues that high energy costs are a key barrier to the competitiveness of German industry, particularly steel production, which is energy-intensive.
The federation also emphasized the importance of industry-specific energy pricing, particularly in the face of high basic market prices in Germany. While the coalition's pledge to reduce power prices is seen as a step forward, WV Stahl points out that the country needs a dedicated industrial power price that ensures a level playing field with other European nations. The French and Italian models of power pricing were highlighted as benchmarks for Germany to follow in order to ensure that its steel industry remains competitive internationally.
Promoting Hydrogen and EU Safeguard Measures: A Step Towards Sustainability and Protectionism
Another key element of the new Coalition Contract that the WV Stahl is particularly pleased about is the commitment to promote the development of hydrogen technology, which plays a crucial role in Germany’s long-term industrial and environmental goals. The contract's openness to a variety of hydrogen colours (i.e., green, blue, and grey hydrogen) is a notable aspect, as it acknowledges the diverse ways in which hydrogen can be produced and utilized in industry. Hydrogen is seen as a potential substitute for coal in steel production, which would significantly reduce CO₂ emissions from the steel sector.
Additionally, the WV Stahl supports the government’s pledge to extend and enhance EU safeguard measures, which are designed to protect European industries from cheap imports, especially steel from third countries. The European Union has increasingly relied on these measures to defend against a flood of lower-cost imports that could undermine the domestic market. According to WV Stahl, one third of the steel used in the EU is imported from outside the region, and the need for protective measures has never been greater.
A major highlight in the coalition's contract is the push for the Carbon Border Adjustment Mechanism, which aims to ensure that products entering the EU market meet the same environmental standards as those produced within the EU. WV Stahl lauded this measure but urged the government to push for a wider application of CBAM across the entire value chain, aligning with the broader goals of the EU’s Steel and Metals Action Plan. The mechanism will not only help protect German steel producers from unfair competition but also incentivize foreign producers to adopt greener practices.
Steel Scrap and Domestic Supply: Essential Considerations for Industry Growth
In addition to energy and environmental considerations, WV Stahl also commended the coalition’s attention to steel scrap, an essential feedstock in steel production. The government’s commitment to improving the domestic supply of steel scrap is seen as vital for the sustainability of Germany’s steel industry. Steel recycling, a process which involves reusing steel scrap to make new products, plays a crucial role in reducing the industry's environmental footprint.
The issue of steel scrap is particularly important because its availability directly affects the cost and efficiency of steel production in Germany. The WV Stahl has called for a more proactive approach in ensuring a consistent and sustainable supply of steel scrap within the country, which could also reduce Germany’s dependence on scrap imports.
Infrastructure Investment and Market Creation for CO₂-Reduced Products
Lastly, WV Stahl addressed the Special Fund for Infrastructure, which was announced by the German government in early April. While the fund is seen as a positive development, the federation warned that the allocation of funds must be closely aligned with strengthening Germany's domestic industrial base. The steel industry, in particular, must see direct benefits from this infrastructure investment to ensure that the country remains a leader in steel production, both in terms of quantity and quality.
Additionally, the federation underscored the need for the government to create lead markets for CO₂-reduced steel products. As Germany and the EU strive to meet climate goals, the steel industry must be incentivized to invest in low-carbon technologies. Creating markets for these products is essential to stimulate demand and drive innovation in the industry.
Key Takeaways:
• The German Steel Federation (WV Stahl) has welcomed the Coalition Contract between the CDU, SPD, and the Green Party.
• A key pledge is to reduce power prices and grid fees, critical for improving Germany’s industrial competitiveness.
• WV Stahl advocates for industry-specific power prices, citing models from France and Italy as examples.
• The government will continue promoting hydrogen, including various hydrogen colours, to reduce CO₂ emissions in steel production.
• EU safeguard measures will be extended, and the Carbon Border Adjustment Mechanism (CBAM) will be applied to protect the steel sector from unfair imports.
• The government will address the supply of steel scrap, an important feedstock for the industry.
• The Special Fund for Infrastructure must be focused on strengthening Germany’s industrial base, particularly in steel production.
• There is a call for the creation of lead markets for CO₂-reduced steel products to incentivize sustainable growth in the industry.
