ArcelorMittal Faces Regulatory Challenges in Advancing European Decarbonization Efforts

ArcelorMittal Faces Regulatory Challenges in Advancing European Decarbonization Efforts

(IN BRIEF) ArcelorMittal has announced a delay in its investment decisions regarding hydrogen-ready steel production technologies, citing uncertainties in the regulatory and energy markets. While progress on green hydrogen remains slow, the company continues to pursue other avenues for reducing emissions, including the construction of Electric Arc Furnaces and advancements in carbon capture technologies. The company remains committed to achieving net-zero emissions by 2050 but stresses that the path to decarbonization is contingent upon stronger policy support and clearer regulatory frameworks.

(PRESS RELEASE) LUXEMBOURG, 27-Nov-2024 — /EuropaWire/ — ArcelorMittal, a leading global steel manufacturer, has announced a delay in its decision to proceed with investments in low-carbon steelmaking technologies, citing ongoing uncertainties within Europe’s energy, policy, and market environments. Initially, the company planned to invest in hydrogen-ready Direct Reduced Iron Electric Arc Furnace (DRI-EAF) systems to replace several of its blast furnaces across Europe as part of its strategy to reduce emissions. However, slow progress in the green hydrogen sector and an evolving regulatory landscape have prompted the company to re-evaluate its approach.

Slow Progress on Green Hydrogen and Market Conditions

The company’s initial plans were based on the assumption that green hydrogen would soon become a viable alternative to natural gas for DRI production, allowing for a smoother transition toward cleaner steelmaking. However, green hydrogen is still not competitive enough to replace natural gas in DRI production. Alongside this, the carbon border adjustment mechanism (CBAM), aimed at protecting European industries from carbon leakage, is also showing significant gaps. There is also limited willingness among customers to pay premiums for low-carbon steel, which further complicates the financial viability of the transition.

Awaiting Key Policy Developments in 2025

ArcelorMittal emphasizes the importance of having a clearer policy framework before making substantial investments. The company is awaiting several important policy updates in 2025, including the review of CBAM, potential revisions to steel safeguards, and the forthcoming Steel and Metals Action Plan. These initiatives are expected to define the regulatory environment and provide the necessary visibility to shape future investments in decarbonization.

In the meantime, ArcelorMittal continues its engineering work and is exploring a phased approach to decarbonization, starting with the construction of Electric Arc Furnaces (EAF) that can reduce emissions through the use of scrap steel.

Ongoing Efforts in Decarbonization

Despite the delay in some investments, ArcelorMittal remains committed to its goal of achieving net-zero emissions by 2050. The company continues to make progress in its decarbonization efforts, including the construction of a 1.1-million-tonne EAF at its Gijón plant in Spain, expected to reduce CO2 emissions by one million tonnes. Additionally, the company is increasing production at its Sestao plant in Spain, with plans to reach 1.6 million tonnes by 2026, producing low-carbon steel using its XCarb® recycled and renewably produced steel.

ArcelorMittal also leads the market with its XCarb® low-carbon emissions steel, which has a carbon footprint as low as 300kg per tonne, and plans to double its sales of low-carbon steel to approximately 400,000 tonnes this year.

Looking Ahead: Decarbonization Technologies and Challenges

Looking further ahead, the company remains optimistic about the potential of carbon capture utilization and storage (CCUS) technologies, which, like green hydrogen, are not expected to show significant results until after 2030. ArcelorMittal already operates a CCU facility at its plant in Gent, Belgium, and has two additional pilot projects underway.

Leadership’s Commitment to Net-Zero by 2050

Aditya Mittal, CEO of ArcelorMittal, reiterated the company’s commitment to decarbonization, stressing that while the company is confident in its ability to reach net-zero by 2050, the path forward might differ from the previous strategy outlined. He called for stronger policy initiatives to support the necessary investments for a greener steelmaking industry.

“We are grateful for the support from governments so far, but we need more clarity and stronger policies to help accelerate the transition,” said Mittal. “The Green Deal Industrial Plan and the Steel and Metals Action Plan will be key to unlocking the necessary policy framework. While some customers are ready to pay a premium for low-carbon steel, the majority are still hesitant, which makes the right policies crucial to scaling up the market.”

Mittal expressed optimism that the policy decisions made in 2025 will provide clarity on the direction of the company’s decarbonization efforts, positioning ArcelorMittal to continue leveraging its global presence, advanced technology, and industry-leading innovation.

About ArcelorMittal

ArcelorMittal is one of the world’s leading integrated steel and mining companies with a presence in 60 countries and primary steelmaking operations in 15 countries. It is the largest steel producer in Europe, among the largest in the Americas, and has a growing presence in Asia through its joint venture AM/NS India. ArcelorMittal sells its products to a diverse range of customers including the automotive, engineering, construction and machinery industries, and in 2023 generated revenues of $68.3 billion, produced 58.1 million metric tonnes of crude steel and, 42.0 million tonnes of iron ore. Our purpose is to produce smarter steels for people and planet. Steels made using innovative processes which use less energy, emit significantly less carbon and reduce costs. Steels that are cleaner, stronger and reusable. Steels for the renewable energy infrastructure that will support societies as they transform through this century. With steel at our core, our inventive people and an entrepreneurial culture at heart, we will support the world in making that change. ArcelorMittal is listed on the stock exchanges of New York (MT), Amsterdam (MT), Paris (MT), Luxembourg (MT) and on the Spanish stock exchanges of Barcelona, Bilbao, Madrid and Valencia (MTS).

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SOURCE: ArcelorMittal