Targeted climate neutrality of basic materials industry by 2045 requires regulatory framework

Source: Energy & Management Powernews, June 29, 2022

The German basic materials industry is facing a profound transformation for climate neutrality in 2045, for which the necessary regulatory framework must be built now,

Industrial plants are characterized by lifetimes of up to 70 years, the think tank Agora Industrie noted. 30 to 50% of the plants in the steel, chemical and cement industries would have to be reinvested by 2030. Therefore, it is urgently necessary to invest in climate-friendly instead of conventional technologies in order to avoid massive misinvestments. The German government and the EU must therefore quickly establish a reliable regulatory framework to support companies in this, Agora demanded.The basic materials industry is characterized by a highly competitive environment worldwide. Therefore, the high investment and operating costs of the industrial transformation must be safeguarded by suitable policy instruments, demanded industry representatives in a webinar on June 28. Climate protection contracts (Carbon Contracts for Difference - CCFD) are a key instrument in this context. They allow a rapid start to the necessary investments and at the same time stimulate the development of the required infrastructure. In addition, the supply of climate-friendly products promoted by climate protection contracts would also trigger the development of green lead markets.

Steel and cement industries want to invest

Sandrina Sieverdingbeck Managing Director of the German Ore and Metal Union (Salzgitter AG) said, "We need certifications or definitions for green steel, then customers will also decide what is recognized and becomes established." Secure hydrogen supplies from renewables from 2028 would be helpful in replacing natural gas, Sieverdingbeck said on behalf of her industry.

Alexandra Decker, Manager Public Affairs Germany and Central Europe of Cemex Germany, explained for the building materials industry that a binding carbon footprint for cement and concrete would have to be developed. "The entire value chain needs clear specifications for the CO2 chains along the construction process and the life cycle of the building," she demanded.

The EU is preparing this from 2025. Decker does not think voluntarism is viable, as it is in other products. "We don't get the emotionality like we do with organic eggs or steel for cars. In our case, the building materials disappear into the building envelope," she said. Therefore, without firm targets, there are no decisions for investments.

Ministry promises climate protection contracts this year

For the German Federal Ministry of Economics and Technology (BMWK), Peter Menck, industrial policy department, participated in the webinar. He said measures to capture and use (CCS and CCU) the climate gas CO2 could also in principle receive funding in the form of CCFD or similar. "This is also being discussed at the EU level and we will create a meaningful national framework," he promised. "The climate protection contracts should be available this year."

Climate protection contracts must be structured in such a way that they also stimulate the supply side for green steel or green cement, for example, Menck indicated. For this reason, he said, the BMWK is currently calling on companies to participate in an expression of interest procedure for the planned promotion of project-based climate protection contracts. There they could submit offers for CO2 savings and the required investments, Menck advertised.

The expression of interest procedure for the planned promotion of project-based climate protection contracts is available on the BMWK website.

Author: Susanne Harmsen