Industrial Impasse: Investment Intentions in Abeyance Amid Ambiguity

In a decision reverberating through Europe’s decarbonisation efforts, ArcelorMittal Europe has officially suspended its flagship Direct Reduced Iron and Electric Arc Furnace projects in Bremen and Eisenhüttenstadt, Germany. The company notified the German Federal Government that it will not proceed with the projects within the stipulated timeline of June 2025, as required under its €1.3 billion subsidy contract.

These investments were considered critical milestones in Europe’s green steel transition and were a centrepiece of ArcelorMittal’s goal to reduce carbon emissions intensity by 2030. The cancellation signals growing friction between climate targets and industrial economics.

“We appreciate the financing offered by the Federal Government of Germany and the state of Bremen, as well as the support of Brandenburg. But even with financial support, the business case is not strong enough,” said Geert van Poelvoorde, CEO of ArcelorMittal Europe.“It shows the sheer scale of the challenge we face.”

Fiscal Frustration: Financing Fails to Forge Feasible Future

While the German state had committed €1.3 billion to facilitate the transition, ArcelorMittal stated that market realities continue to obstruct economic feasibility. The DRI-EAF route, seen as essential for deep decarbonisation, demands consistent access to low-cost, renewable electricity, a resource Germany has struggled to provide.

Electricity prices in Germany remain high, among the highest in Europe, and notably more expensive than in France, where ArcelorMittal recently confirmed its next EAF project in Dunkirk. The Dunkirk EAF plant decision reflects the steelmaker’s need to anchor decarbonisation plans in regions where energy pricing is stable, transparent, and internationally competitive.

“The first new EAFs will be built in countries where there is visibility and certainty on low-cost electricity,” van Poelvoorde stated bluntly.

Policy Paralysis: Protracted Progress Plagues Paris Pledges

ArcelorMittal's decision also reflects growing disillusionment with the sluggish implementation of EU policy instruments like the Steel and Metals Action Plan and Carbon Border Adjustment Mechanism. These mechanisms were designed to support decarbonisation in hard-to-abate sectors like steel, but so far, tangible results have lagged behind expectations.

The company reiterated that while Europe continues to make ambitious pledges, real-world policy tools are either delayed, underfunded, or inadequately enforced. In its April sustainability update, ArcelorMittal acknowledged it is increasingly unlikely to meet its 2030 carbon emissions intensity target.

“The European Commission and Member States are taking steps, but they are not happening quickly enough,” van Poelvoorde warned.“I’m concerned that some actions may not go far enough to achieve their intended purpose.”

He emphasised that without fast-tracked reforms, Europe's industrial players will continue to struggle with conflicting pressures: staying globally competitive while investing in carbon neutrality.

Hydrogen Hiccups: H₂ Hope Hindered by High Costs & Hazy Viability

The feasibility of green hydrogen, a cornerstone of low-carbon DRI production, remains elusive. Despite high expectations, the infrastructure for scalable, affordable green H₂ is still years away. ArcelorMittal cited the lack of cost-competitive green hydrogen as one of the decisive factors behind the project's suspension.

Meanwhile, natural gas-based DRI, an often-proposed interim technology, has not proven economically viable in Europe either. Rising gas prices, volatile supply chains, and emissions concerns have reduced its attractiveness as a transitional fuel.

“There’s slower-than-expected progress on all aspects of the energy transition,” the company said in a statement.“Green hydrogen is not yet a viable fuel source, and natural gas-based DRI is not competitive.”

Market Malaise: Metallurgical Makers Mired in Demand Despair

Compounding the energy and technology issues is the steel market’s ongoing malaise. European flat steel demand remains weak, especially from core sectors like automotive and construction. Simultaneously, imports have surged, intensifying pricing pressure on European producers.

“The European steel industry is under unprecedented pressure to remain viable, and that’s without the additional cost of decarbonisation,” van Poelvoorde said.

ArcelorMittal has been vocal about the need to limit flat steel imports to 15% of the EU market, a significant cut from current levels, which hover around 30%. Without immediate trade intervention, the company fears that further investments in green steel will remain financially unfeasible.

“We need flat product imports to be halved from today’s levels. Only then will the industry have space to breathe,” he added.

Trade Tensions: CBAM Credibility Contingent on Concrete Controls

One of the most debated instruments is the Carbon Border Adjustment Mechanism, which is designed to prevent carbon leakage by taxing high-emission imports. However, its effectiveness is still theoretical. Concerns remain over loopholes, exemptions & enforcement delays.

Steelmakers argue that until CBAM is implemented in full force, with accurate emissions tracking & compliance checks, foreign producers will continue flooding Europe with cheaper, higher-emissions steel. This undermines EU manufacturers who are legally and financially bound to meet stricter sustainability standards.

Phased Futurism: From Full Fervour to Fragmented Feasibility

Instead of abandoning its decarbonisation roadmap entirely, ArcelorMittal has signalled a phased approach going forward. For Bremen and Eisenhüttenstadt, the next step involves detailed planning for EAF construction, without immediate commitment to DRI.

The company wants to keep options open, positioning itself to act quickly when business conditions improve. This modular strategy allows ArcelorMittal to continue technical preparations while awaiting better clarity on market, policy, and energy costs.

“We remain committed to reducing the carbon footprint of our assets,” the company stated, “but transformation must be economically sustainable.”

Executive Exhortation: Europe’s Emissions Effort Needs Expedited Execution

Van Poelvoorde closed his remarks with a plea for decisive European action, stressing that industrial competitiveness and climate progress must go hand-in-hand.

“I’ve been in the steel industry my entire career. I remain convinced that Europe, and Germany, can maintain a thriving steel industry,” he said.“But it must act decisively to ensure words of commitment translate into genuine supportive action.”

His message to policymakers was unambiguous: without urgent reforms to electricity pricing, trade policy, and transition funding, the steel sector risks stagnation, not transformation.

Key Takeaways:

• ArcelorMittal Europe has suspended its €1.3B DRI-EAF projects in Germany, citing poor investment conditions, high electricity costs & market weakness.

• Green H₂ remains non-viable & natural gas-based DRI is uneconomical, delaying steel sector’s low-carbon transition despite EU climate pledges.

• CEO Geert van Poelvoorde urges EU to halve flat steel imports & fast-track CBAM implementation to protect domestic producers & enable green investments.