The European Commission has announced it has adopted a new “Sustainable Finance Strategy”, which includes the proposal of a “European Green Bond Standard”. German steel association WV Stahl says some issues with the strategy remain unresolved, however, Kallanish notes.
The strategy is to facilitate funding of long-term projects. Issuers may use European green bonds to fund multi-year EU projects, such as converting a production facility like a steel plant to reduce its emissions, the Commission explains. It notes that the European green bond also applies to “transition activities”, and in this context names cement and steel manufacturing.
“The direct reduction technology, which is indispensable for climate-neutral steel production, is not clearly classified as sustainable,” WV Stahl president Hans Jürgen Kerkhoff points out.
Kerkhoff is particularly concerned about the lack of understanding that the transformation in materials industries such as steel does not take place abruptly, but step by step. “For the transition to a climate-neutral steel industry, both breakthrough technologies such as direct reduction and investments in traditional process routes must be considered sustainable,” he says.
For the path to climate-neutral steel production, it is also necessary that the use of natural gas in direct reduction is recognised as sustainable until it can gradually be replaced by green hydrogen, he notes.
Christian Koehl Germany