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Czech steel industry unprepared for EU decarbonisation

Czech industry needs a strategy for meet the decarbonisation requirements set by the EU.

The Czech steel industry is unprepared for decarbonisation, not only technologically but also financially, making it difficult to implement the EU’s decarbonisation plans, experts say.

Experts polled by the Czech News Agency (CTK), also agreed that the state lacks green electricity, hydrogen and other resources – all elements necessary to meet EU plans to be carbon neutral and effectively achieve net-zero greenhouse gas emissions by 2050.

There are options for low-emission steel production, including replacing coke with hydrogen as a reducing agent or making steel from scrap in an electric arc furnace. However, there is not enough scrap to meet all demand. The production process requires large amounts of electricity, the price of which has risen enormously in recent years, Daniel Urban, chairman of the Czech Steel Union, told CTK.

The government of Petr Fiala has decided to help the industry struggling with expensive electricity by paying part of the renewable energy levy on its behalf this year.

As far as hydrogen is concerned, the Czech Strategy 2021 states that the operational verification of hydrogen use in industry should start between 2026 and 2030.

However, Czech steel mills are not planning to introduce hydrogen steel production before 2035. According to Urban, it is unrealistic to do so earlier because the Czech Republic and other EU member states do not have their own hydrogen. If this resource is used in the Czech Republic, it will most likely be imported.

According to Oldrich Sklenar, an analyst with the Czech Association for International Affairs, the state should develop a plan to identify which industries are of public interest and to what extent, and how to approach their future support, if needed. This support should primarily focus on investment to reduce emissions or energy intensity, for instance. Proceeds from carbon credit trading could be used for this purpose, he told CTK.

The transition to a low-carbon economy will require decarbonised steel, both for the production of transport vehicles and for infrastructure construction, said Sklenar. “We will not help ourselves by buying steel from abroad because foreign production usually produces more emissions… From this point of view, it is desirable that production continues at home, together with support for its decarbonisation,” he said.

Delivered by CzechTrade team Canada.