Responding to ArcelorMittal’s announced delay of its steel decarbonisation plans in Europe, climate campaigners have issued a sceptical analysis of the company’s latest move, which is in line with its history of backtracking.

Following repeated announcements of delays in plans throughout 2024, ArcelorMittal said on Tuesday that financial investment decisions are on hold in all four European countries where hydrogen based Direct Reduced Iron (DRI) plants were expected [1]. This is despite being awarded billions in public subsidies.

Climate campaign organisation SteelWatch finds there are two somewhat understandable – but insufficient – reasons that could explain a pause, and three cynical ones. Caroline Ashley, Executive Director of SteelWatch summarised their assessment: “feasibility has got harder, current market conditions are tough, but these are not good enough reasons to stall on investment in a future-fit industry. We think the announced delays are also motivated by political games with the incoming European commission, a continued business tactic of promising shiny actions that lack real intent, and worst of all: a belief that climate action is a ‘nice to have’, not a fundamental necessity.”

SteelWatch Assessment:

Understandable but insufficient reasons:

The feasibility of H2-DRI in Europe is harder now than when the company first made announcements, due to slow development of green hydrogen infrastructure. This would be a reason to review site specifics, and how green iron can be delivered across its fleet. But that alone is not enough reason to stall it all now, when investment might still just be in time to meet 2030 decarbonisation goals.

The steel industry is struggling right now, with excess supply squeezing prices and margins. That is a genuine problem, requiring attention of policymakers as well as steelmakers. But it should not be confused with the totally different challenge of transforming the steel industry to a near-zero emissions sector of the future. Short term crisis thinking might see delaying change as prudent, but when transformation takes years and assets last decades, it’s not: it’s a risk.

Cynical reasons to stall decarbonisation investment:

Political game playing with the European Commission: ArcelorMittal has proved over the years to be the steelmaker most effective at garnering subsidies from EU governments. This year, it played one government off against another – for example creating fear in Spain and Belgium that investment would move to the company’s plant in France. This week’s announcement, carefully timed for the incoming EU Commission, seems a clear play to leverage more subsidies and softer conditionality.

Lack of serious intent: The initial announcements dating back years have garnered shine and subsidy for ArcelorMittal but it’s not clear it was ever seriously committed. In Spain, the Gijon plant was promised years ago, with expected operation in 2025. The final investment decision is long past due. In Dunkirk, the state aid contract was filed in 2022. None of today’s market or political shifts this year are responsible for those past three years of delay. Announcing shiny plans, then failing to follow, seems to be a well-rehearsed strategy that delivers PR wins for ArcelorMittal, and nothing for the climate.

Lack of climate commitment: Another reading is that ArcelorMittal simply takes decarbonisation of its fleet and stabilising climate as optional or as a “nice to do”, not as a necessity or responsibility. For a company with emissions the size of Belgium, decarbonisation should be the north star. The CEO said he remains committed to net zero in 2050, but with no mention of the company’s 2030 targets. Meanwhile the science is ever clearer that sharp emissions cuts by 2030 and 2040 are essential in global climate action.

Commenting further on the political dialogue between steelmakers and European governments, SteelWatch assessed that both governments and the company need to share the blame for over promising and under delivering so far. It calls on European governments to take a ‘more for more’ approach. Policy support must be carefully deployed for a sustainable steel industry in Europe, with robust decarbonisation pathways, just transition measures, wide participation, and honest conversations on the best way to afford change across the continent. The pause – and threats – by steemakers must not be used as backdoors to weaken climate ambitions and commitments. Instead, honest conversations

SteelWatch Executive Director, Caroline Ashley added: “Slowing demand and a global market flooded by dirty steel are real challenges, but retaining jobs and competitiveness requires steel production to be fit for the future. The climate crisis is not going away because the markets are having a rough period. We need only look at the Valencia floods to understand the consequences of inaction are biting in deadly ways. Building a competitive decarbonised industry has to be a priority, starting right now.

ArcelorMittal will not be able to meet its emissions intensity targets [2] with its current production fleet, heavily reliant on coal-based blast furnaces if it does not urgently and diligently begin phasing out coal-based blast furnaces and phasing in green iron. It is a global company, with iron and steel production in 19 countries [3]. It has secured billions of Euros in subsidies to transform its coal-based plants. SteelWatch expects it to use its global position to accelerate innovation and decarbonisation across continents.“

Contacts:
Caroline Ashley
Director, SteelWatch (United Kingdom)
caroline@steelwatch.org, +44 7947 691 911

Greg McNevin
Communications, SteelWatch (Australia GMT+11)
greg@steelwatch.org, +61 0475 247 044

Jeané Meyer
Communications, Steelwatch (South Africa GMT+2)
jeane@steelwatch.org, +27 664 746 830

Notes:

ArcelorMittal has officially announced that it is holding off on making FID on its 5 announced H-DRI projects in Europe. It notes the 2025 CBAM review and the publication of a Steel & Metals Action Plan as pivotal to whether the right parameters will be in place to shape the business case for decarbonisation investment in Europe: corporate.arcelormittal.com/media/press-releases/arcelormittal-provides-update-on-its-european-decarbonization-plans
ArcelorMittal has pledged to reduce CO2 emissions by 35% across its European operations, and 25% globally, by 2030 and achieve carbon neutrality by 2050 (corporate-media.arcelormittal.com/media/yw1gnzfo/climate-action-in-europe.pdf). To support these goals, ArcelorMittal announced significant investments across Europe. So far, EUR3 billion in public aid has already been secured for this.
32 blast furnaces and 30 EAFs across 16 countries, excluding joint ventures.

Identified: Hydrogen Storage Material’s Key Restriction