25 September 2026 – Green Steel made with German hydrogen has failed. From Bremen to Saarland, electrolyser projects are collapsing while steel mills prepare to start production with natural gas. CBAM and steel tariffs, sold as a protective shield for the green transformation, are nevertheless supposed to remain. So who or what are they actually protecting now?
Green Steel Runs on Natural Gas: The Hydrogen Fairy Tale Is Over
Hydrogen production in the Verden district of Lower Saxony has been buried this week. It is “definitively no longer economically viable”, reports the local Kreiszeitung. Gasunie is nevertheless continuing to dig: 38 kilometres of pipeline, 1.40 metres in diameter. SPD MP Dörte Liebetruth enthuses about an “energy motorway”. The only thing missing is the traffic.
Verden is not an isolated failure. Verden is the pattern. Green Steel made with domestically produced hydrogen, the prestige project of German industrial policy, is crumbling site by site.
A Graveyard of Hydrogen Flagship Projects
Bremen: ArcelorMittal cancels the transformation projects in Bremen and Eisenhüttenstadt, leaving around €1.3 billion in state funding on the table. Who turns down free money? Someone who has done the maths. EWE promptly stops its 50 MW electrolyser project.
Saarland: three electrolyser projects, more than 300 MW, all stopped. €100 million in funding for Völklingen Fenne was never drawn down. Hydrogen will instead come from France: 6,000 tonnes rather than the 50,000 tonnes originally tendered.
Duisburg: thyssenkrupp freezes its tender for up to 151,000 tonnes. The bids? “Significantly higher” than expected.
Salzgitter: production will begin in 2027 predominantly with natural gas. Its own electrolysis capacity and the EWE contract cover around 13 per cent of demand. The rest is hope.
Across Germany, according to dena, 193 MW of electrolysis capacity is currently operating. A meagre 1.9 per cent of the 10 GW target for 2030. EWI removed almost three gigawatts of announced projects from its database. Central planning meets physics. Physics wins.
The Electricity Alone Costs More Than the Original
Producing one kilogram of hydrogen consumes around 55 kWh of electricity. Even without electricity tax and grid charges, electrolysers pay between €80 and €100 per megawatt hour according to Öko Institut. That works out at €4.40 to €5.50 per kilogram, for electricity alone. Grey hydrogen costs around €4 per kilogram in total. Domestically produced green hydrogen costs €7.50 to €10.
And Brussels? It defined its “green” hydrogen in such a way that it is barely affordable in Germany. At EWE in Emden, the electricity sourcing criteria increase power procurement costs by as much as 88 per cent. Now the Commission wants to make adjustments. By then, the investors are long gone.
Subsidies With a Built In Breaking Point
Seven billion euros in subsidy frameworks for four steel groups. The condition: rapid adoption of an energy source that does not exist at the required price. The state tied billions to a phantom.
ArcelorMittal manager Reiner Blaschek put it this way: “Decarbonisation at any price leads us down the wrong path.” thyssenkrupp instead had the condition relaxed in Brussels. According to CFO Axel Hamann, the Duisburg plant may initially operate without hydrogen without losing its funding. The federal government and the state are paying around two thirds of approximately €3 billion. Green Steel with natural gas, financed by the taxpayer. You have to sell that one first.
The Fuel for the Green Deal Has Run Out
The fuel for the green transformation and green steel has failed, and it will not be coming back any time soon.
That also removes the economic rationale for CBAM and steel tariffs, which were sold as a protective shield for the green transformation. Without that transformation, they merely protect outdated blast furnaces from competition. Germany’s Green Steel transformation is not happening. But tariffs and CBAM are still supposed to remain?
A question for the defenders of CBAM and steel tariffs: Which green steel transformation are you actually still protecting? Or is it simply the redistribution of wealth from small and medium-sized enterprises to large corporations and major lobbyists that is being protected here? One is left with a question mark.
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