Transition is in progress, yet urgent action is needed to green-light investment and keep France on track for 2030 industrial emissions targets.
March 27th, 2023 – In a new report, “Unlocking the First Wave of Breakthrough Steel Investments in France”, the Energy Transitions Commission (ETC) details key action needed by industry and government to get a first wave of near-zero emissions primary steelmaking projects off the ground in France within the next two to five years.
Near-zero emissions primary (ore-based) steelmaking is critical for France to address the challenge of meeting its climate targets whilst preserving domestic industrial capacity and retaining highly skilled jobs.
The necessary breakthrough technologies are available today and are already being put forward by first movers in France to begin a green steelmaking transition, allowing the country to join pioneers around the world in fostering near-zero emissions steelmaking deployment. The report, however, highlights the gap to a viable investment case and the need to create certainty for investors and financiers to attain final investment decisions (FIDs) on these projects.
The conditions for enabling FIDs in France are within reach, as demonstrated by the report’s analysis, and can be created through five critical actions:
- Building up low-carbon electricity infrastructure to ensure a clean, stable, and affordable electricity supply for industrial consumers as overall power demand increases
- Implementing effective carbon pricing that applies to iron and steel imports as well as domestic production, establishing a truly level playing field for breakthrough products
- Direct government funding, to provide upfront support for high capital expenditures or ongoing support with key operational costs
- Forward offtake agreements, potentially at an initial premium above iron and steel market prices, to firm up revenue streams and create clear demand signals
- Guarantees for de-risking breakthrough technology, offered by national government or EU-level institutions
Government must collaborate with other steel value chain actors to ensure these actions happen fast in order to enable projects to be operational by 2030. All actions are feasible in the short-term and would help unlock a first wave of breakthrough steel investments in France – a vital step in the country’s net-zero transition.
“Ongoing breakthrough iron and steel projects in Dunkerque and Fos-sur-Mer illustrate how France offers a compelling opportunity for these critical projects and technologies. With France 2030’s clear ambition to accelerate industrial decarbonization and innovation, the time is ripe to secure final investment decisions and unlock a first wave of projects in France. Ensuring stable and affordable electricity prices for industry, ideally through a more mature market for power purchase agreements, is the essential ingredient for making these projects happen.” Julia Reinaud – Senior Director, Europe, Breakthrough Energy
France’s target to reduce its industrial emissions by 35% by 2030 cannot be met without reducing emissions from steel, particularly from the country’s emissions-intensive primary production sites. Breakthrough iron- and steelmaking, where direct reduced iron (DRI) production technologies using green hydrogen are paired with conventional steel production methods, offers a solution to the decarbonisation challenge faced by France’s steel industry.
Investing in breakthrough iron and steel projects would preserve domestic production capacity for an increasingly important material and retain employment, all while helping France meet its climate goals. Breakthrough steel offers a better option than the other choices that government and industry could make, such as renovating existing sites with emissions-intensive technology, or closing them and depending on steel imports for a variety of applications, from construction to automotive manufacturing.
“The challenge of decarbonization is a once in a lifetime opportunity to rethink iron and steel production in Europe to make it greener, inclusive and more competitive.” José Noldin – Chief Executive Officer, GravitHy
The report is underpinned by a financial model, developed by the ETC, that simulates the financial performance of different breakthrough steel project configurations in France. The financial model has been made open-access for public use. To read the insight report and access the model visit: https://www.energy-transitions.org/publications/breakthrough-steel/
“Unlocking the First Wave of Breakthrough Steel Investments in France” was developed as part of a series of roundtables in France, convened by the ETC between November 2022 – February 2023 with the support of Breakthrough Energy. The roundtables were open to France’s steel value chain stakeholders, including policymakers and financiers, and saw participation from organisations including political stakeholders: l’Agence de l’environnement et de la maîtrise de l’énergie (ADEME), Institut du Développement Durable et des Relations Internationales (IDDRI), International Energy Agency (IEA), Ministère de la Transition énergétique, Ministère de l’Économie, des Finances de la Souveraineté Industrielle et Numérique; steel producers and equipment manufacturers: ArcelorMittal, Danieli, GravitHy, SMS Group; buyers : Bosch und Siemens Hausgeräte (BSH), TRATON, Schneider Electric; suppliers: ENGIE, Ørsted, Plug, Shell, Vale; and financiers : Crédit Agricole, EIT Innoenergy, Natixis, Société Générale.
Note to editors:
- The French Breakthrough Steel Investment Forum forms part of a larger regional forum series, comprising additional fora convened by the ETC with the support of Breakthrough Energy in Southern Europe, the United Kingdom, and the United States (the latter also with the collaboration of RMI).
- “Unlocking the First Wave of Breakthrough Steel Investments in France ” was informed by discussions with participants of the French Breakthrough Steel Investment Forum, but the organisations represented by those participants have not been asked to formally endorse the report, which should not be treated as reflecting the views of those organisations.
- All analysis contained in “Unlocking the First Wave of Breakthrough Steel Investments in France ” was undertaken by the ETC. For more information on the ETC please visit: https://www.energy-transitions.org/
Caroline Randle, Energy Transitions Commission – [email protected]
Vicki Harding, Energy Transitions Commission – [email protected]