German ‘steel dialogue’ highlights competitive electricity supply importance
The German government will lobby the European Commission for measures to support the German steel industry, as its existence is under threat, while competitive electricity supply remains critical, German Chancellor Friedrich Merz said after the “c” he hosted in Berlin on Thursday.
“The European Commission’s [EC] recent proposals for effective protection of the steel industry are a step in the right direction,” he said. Meanwhile, “without a significant reduction in energy costs, this [steel] industry in Germany would not be able to survive.”
“Politicians must do everything in their power to preserve the industry,” he continued, adding that local manufacturers should be protected and their transformation to climate-neutral production supported.
The German government has already implemented steel industry support measures. These include the abolition of the gas storage levy, the reduction of electricity tax to the EU minimum and the reduction of transmission grid charges, by €6.5 billion ($7.5 billion) in 2026 alone, the government notes.
It is also lobbying the European Commission for further relief in order to maintain the competitiveness of the steel industry and keep it on its path towards climate neutrality. Specifically, the so-called electricity price compensation is to be expanded and an industrial electricity price is to be implemented, Kallanish notes.
In contrast to the industrial electricity price, the electricity price compensation would provide additional relief for the steel industry through an increase in the aid intensity expressly demanded by the German government.
The government meanwhile continues to work intensively to end exemptions from sanctions for semi-finished steel imports from Russia, with plans to rigorously prosecute any attempts at circumvention.
German finance minister Lars Klingbeil said: “We must continue to reduce energy costs and improve the conditions of competition and give a clear European response to global overcapacity and dumping prices. We want a clear focus on climate-friendly quality steel from Germany and Europe. For our infrastructure and defence, in the automotive industry and in other important areas, we want domestic and European steel to be used as a priority.”
The steel dialogue participants agreed consistent measures are needed to address the negative effects of global overcapacity and the threat of trade diversion to the EU market. “To this end, the EU must exhaust its trade policy possibilities. What is needed is a robust, balanced successor to the safeguards that expires on 30 June 2026 that complies with WTO law,” the government notes.
In addition, it supports the EC’s efforts to negotiate easing US tariffs on steel and aluminium, including derivatives, so that European goods can be exported to the USA using duty-free quotas.
The German government advocates CBAM’s extension to downstream steel products and calls on the Commission to present a model for WTO-compliant export compensation in the near future. Should effective carbon leakage protection via CBAM or compensation payments prove unsuccessful, competitiveness should continue to be regulated through the free allocation of allowances, it adds.
The German Steel Association – WV Stahl – meanwhile called on politicians to act quickly. “There should be no more time lost and at least lower industrial electricity prices should be introduced as quickly as possible,” it urges.
WV Stahl is seeking fair competition instead of market distortion, and has called on the government to lobby Brussels to introduce robust trade protection against price dumping and overcapacity as quickly as possible.
“Competitive energy prices require a permanent reduction of network charges, continuation and deepening of electricity price compensation, and in the medium term, the introduction of a reliable industrial electricity price to keep investments in the country,” the association says.
Svetoslav Abrossimov Bulgaria
